LiteForex switches cryptocurrency trades to ‘close only’ mode
The lineup of forex brokers that are planning to restrict trading on cryptocurrencies due to overexposure to its recent volatility are seemingly growing bigger. Among the latest entries into this group of brokers is retail forex platform LiteForex.
In a note to its clients, the firm said that it will temporarily suspend its cryptocurrency CFD offering until further notice in an effort to protect them from adverse market volatility.
LiteForex will transfer trades on cryptocurrency pairs to close only mode, effective today, because of “the liquidity provider’s technical issues.”
This basically means that traders will not be allowed to open new trades with cryptocurrency. However, it’s not clear if the firm plans to liquidate clients’ open position at a certain date.
“Our technical experts are activating a more stable liquidity source, and cryptocurrencies will be traded as usual shortly,” LiteForex further explains.
The move to restrict cryptocurrency trading came on the heels of Bitcoin’s selloff Wednesday, where a flash crash erased billions of dollars in market cap. The largest cryptocurrency by market value briefly dropped about 18 percent a day earlier.
Founded in 2005, LiteForex is domiciled in Cyprus where its Liteforex (Europe) Ltd brand is regulated by CySEC. It also maintains an offshore branch in Marshall Islands which is subject to a more flexible, looser regulatory regime.
Together with Bitcoin and major virtual currencies, LiteForex has recently expanded its crypto offering amidst burgeoning client demand and to place it on par with other brokers in the industry.
Fresh from beginning to support Bitcoin trading back in 2017, LiteForex has strengthened its product suite to include more than 20 crypto-pairs. The brokerage also enabled the deposit and withdrawal into accounts using crypto coins. Among the accepted cryptocurrencies are Bitcoin, Bitcoin Gold, Bitcoin Cash, Litecoin, Monero, and Ethereum.
Apart from measures that have been taken by various providers to manage their exposure to risk, the majority of traders might make several adjustments to reduce their exposure to cryptocurrencies. The current market turmoil could swiftly have a knock-on effect on open trades, trigger stop-outs, and liquidate accounts as markets turn.
As such, brokers have already ironed out their plans to protect themselves and their customers from any sharp market shifts that have the potential to wipe out account balances in an instant.