Crypto trading is a highly regulated industry in the United Arab Emirates. Depending on where the brokerage is registered, the licensing authority and the governing rules may differ. In this article, we will answer all questions that residents in the UAE may have about trading in crypto CFDs.
Let’s get started.
Is crypto CFD trading legal in the UAE
Yes, crypto CFD trading is legal in the UAE and heavily regulated. There are four main licensing authorities that handle virtual asset trading in the UAE.
- The Capital Market Authority (CMA): This is the federal body that regulates the financial services providers registered in the UAE mainland.
- Virtual Assets Regulatory Authority (VARA): This body regulates virtual asset activities for in the Dubai mainland and Dubai-based freezones (except DIFC) like DMCC, DWTC, IFZA, and JAFZA, subject to applicable scope and exemptions
- Financial Services Regulatory Authority (FSRA): This regulatory authority covers licensing for financial service providers registered with the Abu Dhabi Global Market (ADGM).
- Dubai Financial Services Authority (DFSA): This regulatory body handles licensing for companies registered with the Dubai International Financial Centre (DIFC).
There is an important point to note here. Crypto trading is different from crypto CFD trading. Crypto trading is the buying and selling of actual cryptocurrencies like Bitcoin, or Ether. On the other hand, crypto CFD trading is the buying and selling of CFDs (Contracts for Difference) that track the price movements of various cryptocurrencies.
A crypto CFD is a derivative product and is thus typically leveraged. However it is not an Exchange Traded Derivative (ETD) like a futures contract. Hence, it is typically governed by the same ambit of regulations as regular CFD trading.
How to Choose a Crypto CFD Broker in the UAE
Picking the right crypto CFD broker in the UAE is extremely critical to not just maximize your profit, but also protect your capital.
Just because a broker lets you sign up with a UAE phone number does not automatically imply that they are authorized to provide their services in the country.
There are a number of factors to consider before picking the right crypto CFD broker for your trade.
What licenses they hold
Does the broker you want to sign up with hold a valid license to offer crypto CFDs in the UAE? In the absence of a valid license, your capital may not be protected under the regulatory framework of the country.
This can get quite confusing. CFD brokers routinely hold trading licenses across different jurisdictions like Bermuda, Seychelles, etc. in addition to the UAE. So, while these brokers may hold valid broker licenses to offer stock or CFD trading in the country, their crypto CFD offerings may fall under a different jurisdiction.
There may also be cases where a broker may be licensed to offer investment advice in the UAE, but their trading license comes from a different geography.
It’s hence important to visit the websites of the relevant authorities like the CMA, VARA, DFSA, and FSRA to verify the exact licenses that your preferred entities hold in the country.
Instruments available
What crypto instruments are available for trade. Do not go merely by the number of assets available (like BTCUSD, ETHUSD, etc.). Liquidity available across these instruments is a major factor too.
If there is not enough trading volume for these instruments, then the spreads are likely to be higher and this can impact your profitability.
Trading platform and features
What trading platforms are available to you as a trader? Getting used to a platform like MetaTrader 4, or cTrader can take time and if the broker you choose does not have the platform of your choice, you could face a learning curve.
This can also be crucial if you are looking for automated trading. This strategy makes use of computer algorithms to determine specific crypto trading strategies based on indicators, and price movements to get in and out of a trade. Each trading platform supports specific programming languages that have their own syntaxes and limitations.
Leverage and margin requirements
The maximum leverage that a broker can offer is governed by the regulatory authority that they are licensed with. While a broker may advertise high leverages, these may be limited to very specific asset classes.
When assessing various crypto CFD brokers in the UAE, look for leverages offered on the specific instruments (like BTCUSD) that you are likely to trade most often.
In addition to these factors, you may also want to compare the fees, minimum and average spreads, customer support, negative balance protection, and slippage across the various brokers before making a decision.
Where to Trade Crypto CFDs Legally in the UAE
There are over 40 regulated and legally compliant CFD brokers in the UAE. Not all brokers offer crypto CFDs however. In this section, we have picked a list of five crypto CFD brokers based on various parameters like spread, trading fee, crypto CFD instruments available, and customer support.
Equiti
Trading name: Equiti Securities Currencies Brokers LLC
Licensing authority: Capital Market Authority
License granted: Trading broker of OTC derivatives and currencies in the spot market
Equiti offers two account types to trade crypto CFDs. The Premier account charges a commission for the trades but offers competitive spreads on all cryptocurrency pairs. The Standard account offers commission-free trading for major cryptocurrency pairs like BTCUSD, ETHUSD, XRPUSD, ADAUSD, SOLUSD, and BNBUSD. The Standard account also offers leverage of up to 1:100 for all tier-1 cryptocurrency pairs.
Platforms available: MetaTrader 5 and Equiti Trader mobile app
Leverage: Up to 200:1
Commission: $0 to 4 bps for Tier-1 cryptocurrencies, 4 to 10 bps for other cryptocurrencies.
IG
Trading name: IG Limited
Licensing authority: Dubai Financial Services Authority
License granted: Arranging Deals in Investments and Dealing in Investments as Principal
of Certificates, Debentures, Futures, Options, Shares, Structured Products, Warrants, Units, Crypto Tokens
IG has two business entities offering crypto CFD trading in the UAE. One is IG UAE which is the locally licensed business entity, and the other is IG International Limited which is a Bermuda registered entity. When you create an account with IG UAE, retail clients can trade at up to 1:30 leverage while professional clients get up to 1:200 leverage.
Platforms available: MetaTrader 4, MetaTrader 5, ProRealTime, IG mobile app and online platform
Leverage: Up to 2:1 on IG UAE for BTCUSD
Commission: $0 on crypto CFD trades with spreads starting at 45 points on BTCUSD
Capital.com
Trading name: CAPITAL COM MENA SECURITIES TRADING L.L.C
Licensing authority: Capital Market Authority
License granted: Trading broker of OTC derivatives and currencies in the spot market
Capital.com lets traders buy or sell 450+ cryptocurrency CFDs, including the popular ones like BTCUSD and XRPUSD. The platform is equipped with an AI assistant and analysis tools to help with your trades. In addition to MT4 and MT5, Capital.com trades can also be performed over TradingView.
Platforms available: MetaTrader 4, MetaTrader 5, TradingView
Leverage: Up to 100:1
Commission: $0 on crypto CFDs with spreads around 50 points on BTCUSD
ADSS
Trading name: ADS SECURITIES – L.L.C – S.P.C
Licensing authority: Capital Market Authority
License granted: Trading broker of OTC derivatives and currencies in the spot market
ADSS is a Forex broker registered with the CMA and headquartered at Abu Dhabi. The platform lets you trade all the popular cryptocurrency pairs with leverage of up to 10:1. Classic account holders can open an account with a minimum deposit of $100 while Elite and Pro account holders will require a minimum deposit of $100,000.
Platforms available: MetaTrader 4, MetaTrader 5, ADSS trading platform
Leverage: Up to 10:1
Commission: $0 on crypto CFDs with spreads (around $120 on Bitcoin)
CFI
Trading name: CFI FINANCIAL MARKETS L.L.C
Licensing authority: Capital Market Authority
License granted: Trading broker of OTC derivatives and currencies in the spot market
CFI is a CFD trading platform that lets you trade Bitcoin, Ripple, Ethereum, and other major cryptocurrency pairs with tier-1 liquidity. With CFI, you have access to MetaTrader 5, TradingView, and the native Trading & Investing app to buy or sell cryptocurrency pairs.
Platforms available: MetaTrader 5, CFI Trading & Investing app, CFI Multi-Asset, TradingView
Leverage: Up to 10:1
Commission: $0 commission.
Getting started with crypto CFD trading in the UAE
Crypto CFD trading in the UAE offers an agile path to profit from digital asset volatility without the burden of managing crypto wallets or securing the underlying tokens. The regulations mandated by authorities like the CMA, FSRA, and DFSA provide a realistic and secure, yet potentially profitable avenue for wealth creation through crypto CFD trading.
However, similar to Forex trading, it is always worth remembering that CFD trading is a high risk activity. Strict risk management and capital protection strategies are necessary in order to make sure traders make use of the safe and dynamic environment provided by the UAE.
