Why there is only a handful of FX brokers accepting BTC deposits?

Hi everyone.

Just curious, why none of the prominent brokers accepts direct bitcoin- or any other cryptocurrency-denominated deposits? I mean there is a handful of brokers that do, like those listed on one of the threads on this forum or 100fxbrokers, but most of them are off-shore brokers.

Does their ability to support deposits/withdrawals in bitcoins have anything to do with their regulation?

It has everything to do with regulations, but now that the futures market has been open to Bitcoin we could see not only FX brokers trading Bitcoin but mainstream stockbrokers. If you think Bitcoin price on a run now, just think what happens when costumers of Merrill Lynch and Charles Schwab are able to buy Bitcoin for their 401K account. Yes $100,000 bitcoin is not far away

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Hi Dennis, thanks for your reply.
Offering BTC-based futures and BTC trading is one thing, but offering bitcoin deposits to clients and allowing them to withdraw funds in bitcoin is an entirely different thing. I am sorry, it’s probably my fault, I should have been more articulate in my post. What I really want to know is, if regulation is the cause for why brokers are not able to accept bitcoin deposits. But why? How do regulators explain this situation?
I know that brokers have to follow the guidelines on prevention of money laundering and financing terrorists, can these guidelines be the reason or maybe there is something else?

Same answer " Government Regulations" there have been a few people try to accept Bitcoin and the Fed was right there to shut them down, and in some cases send them to jail. Until the Government gives brokers the green light and some clear guidelines no one is going to stick the neck out

Yes there is something else IMO - Liquidity and confidence in the exchange rate ar ereally quite low when compared with paper dollars or gold for example.

Well since Bitcoins are not so regulated and pretty much abstract for now and bitcoin transactions are mostly related to illegal payments etc. I can understand why most of the serious brokers currently do not accept Bitcoin payments. Maybe that will change at some point in the future when the Bitcoin market becomes more transparent.

because its a big risk with such volatility. Brokers expose themselves to certain degree of risk if there will be sudden spike and insufficient margin on your side. Just recall 2015 SNB black swan and you can understand why.

Nevertheless I trade BTC cfds on hotforex and tickmill, seems they’ve get around risk issue and ensured enough protection.

It’s not about the trading of Bitcoin CFDs but about accepting deposits, respectively making withdrawals in Bitcoins as “currency”. To be honest I have no idea how does it work. Let’s say I transfer 1 Bitcoin from my Bitcoin wallet to the one of my broker. What will be the available amount of money which can be used for trading? Will I get the equivalent in USD for EUR for example? Or I see 1 Bitcoin and everything gets converted into BTC (margin, commission, swap, PnL etc.)? Anyone to share some experience?

Those few brokers that do accept bitcoin (or some form of it) deposits, they offer bitcoin denominated accounts too. So if you deposit your bitcoin to a bitcoin denominated account, nothing would change for you.
But if you deposit it to a USD or Euro denominated account, your bitcoins will be converted to the currency of your account.

Correct friend, stockbrokers still do not dare to accept payments in cryptocurrencies because even these currencies are not regulated by any private entity or government. Until that happens, they will not take the risk in accepting a money that, as it goes up, can go down quickly.

Ok, I get it, cryptocurrencies are volatile and unregulated.
But what do regulators say precisely to brokers? Is there a specific law that prohibits brokers from accepting bitcoin?

Think of it this way. Do you want to be the broker managing the account of a heavily leveraged trader with an account denominated in bitcoin? All of his trades might be going swimmingly, and you still need to make a margin call because his account ‘currency’ just crashed by 20% in the last hour.

You don’t want that. The broker does not want that. If you want a non-currency account, then get one denominated in gold.

Let us set aside the technical part of the matter for a moment. Let us assume you are the regulatory authority and I am the broker. So Mr. regulator, why can’t I accept bitcoins from my clients? Just because you said so, or you have a law that says that I can’t accept bitcoins because of this, that and that.

I am sure that the representatives of different brokers are present on this forum, what say you? Can you share this information publically or there is a secret forum exclusively for brokers where the secret knowledge is to be discussed?

What you say makes sense. For account in EUR or USD as base currency it is kind of clear, meaning I deposit 1 BTC and my USD trading account is funded with 120 USD (the amount is for easier calculation I know that 1 BTC is almost 17K USD at the moment I write my comment :)).
So in this case if I trade EURUSD with 1:100 leverage I would need 1000 USD margin to open 1 lot (100 000 units) which is fine. I will just get 1000 USD from mine 10K used as margin for that trade.
However if my trading account is in BTC I will have 1 BTC as balance and if I want to open the same trade (1 lot EURUSD with 1:100 leverage) I will need what? 0.05 BTC as margin? And if yes what happens if the price of BTC goes up to 25K USD? Do I need 0.04 BTC for the same trade? Or maybe the margin requirements are preset fixed to some number, no matter what the current price of BTCUSD is?
Sorry for the many questions :stuck_out_tongue:

Where do you get this illegal payment crap, the US dollar is the most used currencey for Drugs, Gun running, Sex Trade, War, briding congress… you name it

so you walk into your brokerage and say - Here’s 100 milk bottle tops - give me $1000 credit to my account - What response do you think he should give you ?

Hi Falstaff,

There is no wide and active market for milk bottle tops (or maybe there is one in some remote areas among indigenous people, I don’t know, and it is not the matter at hand) and their value in USD terms is unknown. However, there is a market for bitcoins, and its value is known. There are even BTC-based futures, for crying out loud :slight_smile:

I must point out that some brokers still do accept bitcoins from their clients as a form of deposit.

So no one knows the exact reasons preventing the majority of brokers from accepting bitcoins.

lets just say its a general rule, people fear what they do not control and thats BTC. many will fall if not done correctly, brokers in general are a business some are comfy with letting traders trade the btc but most are not, especially those who are new trying to establish first lol. so there u have it, i mean though hotforex offers btc, its not like a requirement to trade it, but if you follow the market its kinda mind blowing, people call it the 8 year trend lol. lets see how it goes.

While there are government regulations involved, probably it is also because brokers themselves don’t understand the dynamics of BTC sufficiently. The key is BTC is too risky at the moment. So better, be safe than sorry.

Now the trend is changing, a lot of Forex brokers are accepting deposit and withdrawals in the major altcoins including Bitcoin.