Q&A: Trading cryptos as CFDs

Michael Kamerman, managing director, FXCM

What are the different options when trading cryptocurrencies?

There are a couple of different options for trading cryptos. You can buy the physical cryptocurrency with a provider that usually gives you an online wallet which you must learn to use to store your crypto. More recently trading platforms have emerged, but these remain unregulated in most cases.

In contrast, people can trade through a regulated contract for difference (CFD) broker such as FXCM. This allows customers to trade cryptocurrencies alongside many other instruments, like foreign exchange, commodities, metals, energy products, stock indices and so on. Trade bitcoin if you see it moving. Trade US stock indices if they are moving instead. All in one account.

FXCM offers CFDs on cryptocurrencies. Why should customers trade CFDs over the underlying instrument? 

It comes down to one major question: are you someone who thinks cryptocurrency is going to upend the entire financial system or are you someone who just wants to get in on big moves on bitcoin and other cryptos?

If you fit the profile of the latter, which we think is a big number of those interested in crypto, then CFDs are your best route. If you are a cryptocurrency maximalist who thinks that it’s going to compete with or even replace fiat currencies like the USD, then you may prefer to trade physical cryptocurrencies. However, we think the majority of people are just looking to speculate on the movement of cryptocurrencies and that, therefore, CFDs offer the most efficient route.

What key advantages does CFD trading offer?

The biggest advantage of trading cryptocurrencies as a CFD is that you don’t need to worry about wallets. Currently if you buy a physical cryptocurrency, you have to have a place to store it; typically, this is stored within a wallet provided by an exchange.

But if you do, you have an important decision to make; do you keep your balance with that provider? If you keep it online, in a “hot wallet” as it’s known, you run the risk of a hack depleting all your funds. There have been many high-profile hacks in many of the largest cryptocurrency exchanges in the world. This security issue is of huge concern to many traders.

When you are trading cryptocurrencies as CFDs, you don’t have to worry about the hassle with wallets. You deposit in your chosen currency and the funds are held in segregated bank accounts. The trader just worries about trading the cryptocurrency and FXCM deals with everything else. That is where we see trading via CFDs as having a key advantage.

What differentiates FXCM’s cryptocurrency offering from your competitors?

FXCM has numerous advantages over other foreign exchange and CFD providers. We are a Financial Conduct Authority-regulated broker with 20 years’ experience and have advanced credit, risk management and technology systems. However, the number-one selling point for our customers in relation to cryptocurrencies is price.

FXCM offers some of the most competitive bitcoin spreads in the industry. If you are trading a bitcoin once or twice a year, for example, it may not make much of a difference in terms of cost benefit. But if you are an active trader – and we know that many of our customers are – you can benefit from our competitive pricing.

What does the future hold for FXCM’s cryptocurrency offering? 

We think the future is bright. We have had very positive feedback from our customers, but there is much more to come.

It is still early days for our crypto division, but it is all hands on deck. We currently offer the five most actively traded cryptocurrencies and we are working hard to develop additional crypto products and services. Our product development pipeline means we have a lot to look forward to, so watch this space.


CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

73.62 per cent of retail investor accounts lose money when trading CFDs with this provider.

You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 Forex Capital Markets Limited is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Registration number 217689. Registered in England and Wales with Companies House company number 04072877.