Belgium's FSMA Warns against Selling Trading Products
- These products are advertised on social media, and mostly young people fall for them.
Belgium’s Financial Services and Markets Authority (FSMA) issued a warning on Monday against the companies selling, trading and training products related to Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term, contract for differences (CFDs), and Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.
The market regulator highlighted that most of these products are sold using the so-called multi-level marketing (MLM) structure, meaning the customers get incentives for onboarding more users on the platforms.
“...offers of CFDs and forex via the internet are very risky and vulnerable to fraud,” FSMA noted. “The possibility of loss is much higher than the possibility of gain.”
The market watchdog additionally cited a survey by other European supervisors that shows that 75 percent to 89 percent of the investments in derivative products result in losses.
Most of these products are marketed through social media and advertised as some get rich quick schemes by influencers showing off their luxury lifestyles. The FSMA pointed out that most young people fall for these schemes.
“The message is that everyone can afford this kind of lifestyle if they bring in enough new members and make the right investment in the software being promoted,” the regulator noted.
Regulators Getting Cautious
Indeed, regulators across Europe are actively flagging influencer accounts bragging about profits from the forex and other tradings.
Though the Belgian watchdog did not call all these schemes as fraudulent, it stressed that ‘a great many cases of fraud have also been found to use these instruments’.
Meanwhile, the FSMA is maintaining a list of flagged platforms that it considers suspicious. In June, the regulator warned against three boiler room scams that are illegally offering services in Belgium, Finance Magnates reported.
Furthermore, the watchdog is considering to develop regulations for ‘the sale, purchase, and use of virtual currencies and all related financial products’ as these are becoming the center of cybercrimes.
Belgium’s Financial Services and Markets Authority (FSMA) issued a warning on Monday against the companies selling, trading and training products related to Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term, contract for differences (CFDs), and Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.
The market regulator highlighted that most of these products are sold using the so-called multi-level marketing (MLM) structure, meaning the customers get incentives for onboarding more users on the platforms.
“...offers of CFDs and forex via the internet are very risky and vulnerable to fraud,” FSMA noted. “The possibility of loss is much higher than the possibility of gain.”
The market watchdog additionally cited a survey by other European supervisors that shows that 75 percent to 89 percent of the investments in derivative products result in losses.
Most of these products are marketed through social media and advertised as some get rich quick schemes by influencers showing off their luxury lifestyles. The FSMA pointed out that most young people fall for these schemes.
“The message is that everyone can afford this kind of lifestyle if they bring in enough new members and make the right investment in the software being promoted,” the regulator noted.
Regulators Getting Cautious
Indeed, regulators across Europe are actively flagging influencer accounts bragging about profits from the forex and other tradings.
Though the Belgian watchdog did not call all these schemes as fraudulent, it stressed that ‘a great many cases of fraud have also been found to use these instruments’.
Meanwhile, the FSMA is maintaining a list of flagged platforms that it considers suspicious. In June, the regulator warned against three boiler room scams that are illegally offering services in Belgium, Finance Magnates reported.
Furthermore, the watchdog is considering to develop regulations for ‘the sale, purchase, and use of virtual currencies and all related financial products’ as these are becoming the center of cybercrimes.