Factors to Consider When Choosing a Crypto Broker
Trading Bitcoin Choose a Crypto Broker
Factors to look for and consider when choosing a crypto broker
Regulation is one of the guideline of choosing a broker. As a new trader your first challenge is to choose the right one. The best ones are those that are regulated. This should be the type of firm that you should choose: a regulated crypto broker.
It isn't as easy as it sounds to select a good one & the whole searching process might leave you confused due to the huge competition between them, as they all offer different trading softwares, trading services, order execution & capabilities. Best criteria in choosing is to find a regulated one.
Regulated brokers have to submit all their transactions every year to the regulation authority for audit. This means that these companies can't participate in any illegal activity such as money laundering. This is why your crypto broker asks for Identification documents and proof of residence from traders when they are registering, so when as a trader you're signing up & are asked for these documents when opening an account, you will know why they are being asked for.
Some of These BTCUSD Broker Regulatory Authorities are Listed Below:
USA
The NFA regulates all us based financial firms, the official web site for NFA is https://www.nfa.futures.org/ where the list of USA crypto brokers are listed. NFA does not issue license to other international ones, unlike other regulatory authorities, NFA will only license US based firms. NFA just like CFTC have very overbearing regulation rules which are not favorable to the traders themselves. After these two NFA & CFTC introduced these rules many international crypto brokers closed down their US based branches, Those that did not have America branches were forced to close & transfer the accounts of USA citizens because CFTC threatened to sue any bitcoin trading based firms that is not from America if they open accounts for USA Citizens. This is why most crypto brokers won't accept USA Clients.
USA
The CFTC regulates all America based financial firms, CFTC is Similar to NFA
Cyprus
The CySEC regulates all Cyprus financial firms, the official site is https://www.cysec.gov.cy where you can search for registration and licenses number of those Crypto Trading brokers licensed by this regulator. The CySEC regulates brokers operating within the European Union Jurisdiction of Cyprus Member Country.
UK
NOW FSA has changed name FCA, and regulation details can bound from either FSA or FCA.
The FSA regulates all financial firms in UK, the official web site for FSA is https://www.fsa.gov.uk/ this site contains list of cryptocurrency trading brokers licensed in the UK. FSA also registers other international firms and bitcoin trading based firms from other countries that have an operating office within the UK. To check whether the financial institution you are trading with is regulated in UK just go to FSA Register.
Germany
The BaFIN regulates all German financial institutions, the site for BaFin is https://www.bafin.de and BaFin is the German Federal Supervisory Authority for Investment brokers and institutions operating within German.
Australia
The ASIC regulates all firms in Australia
Japan
Regulates all Japan based firms
Switzerland
The FDF regulates all Swiss based firms
Canada
The CIPF regulates all Canadian firms
European Union Firms
MIFID is more of a Regulation Standard for European Union Firms, than a Regulation Authority.
Mauritius
The IFSC regulates all Mauritius firms
The above Regulatory authorities are most trusted & the most famous regulatory authorities, it is best to open an account with a regulated broker that is licensed by one these regulatory authorities which are the most popular regulators.
About USA Based Bitcoin Broker Regulations and America Regulatory Authorities
NOTE: One thing you should know about regulators is that you might not want to chose NFA or CFTC American Regulators, who have these very strict rules:
- Max Bitcoin Trading Leverage 50:1
- First In First Out FIFO Trading (open trades in 123 trading order, must close then in 123 order, not 321, not 312, not 213 trading order)
- No Stop Loss Bitcoin Order Setting
It is for the above rule that most traders won't open an account with USA brokers, most traders who traded with USA crypto brokers closed their trading accounts and transferred them overseas with the introduction of this rules, around year 2010.
In addition these regulators, will take to court any bitcoin trading financial firm that opens an account for America citizens, this is why no btcusd broker will open an account for an American, Only those in USA can open an Account for An American Citizen. The only ones btcusd brokers accepting America clients are only those brokers based in the USA.
