CFDs and Crypto Adverts Lose Grip on France’s Investment Ad Market

CFDs and crypto adverts have dropped in France, even though they continue to comfortably rake in over 35 percent of the investment marketing budgets spent in the country. The blow came just months after France’s authorities decided to ban ads of financial products based on cryptocurrencies, and also restricted online promotions for CFDs and other speculative instruments.

France’s financial markets regulator, the Autorité des Marchés Financiers (AMF), on Friday revealed that market share of CFDs and similar speculative investments ads shrank to one quarter of all financial ads in the January-September period of this year. This compared to a proportion or nearly 50 percent a year ago.

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Similar sentiment was witnessed amongst the crypto-related advertisers, whose market share took a hit during the same period, shrinking to 12 percent of the investment digital adverts. This a steep drop from the high of 23 percent that cryptocurrency, ICOs and other blockchain products enjoyed in France in the first quarter.

In one of the first moves of its kind by an EU regulator, France’s financial regulators said earlier this year that financial products based on cryptocurrencies are, legally speaking, derivatives. This meant these assets should be formally regulated, their trading platforms will need authorisation to offer them and can no longer advertise them online.

New taxing approach

This comes even though the legal qualification of cryptocurrencies themselves remain a legal grey area, with little guidance to date from European regulators as to whether they should be classified as an asset – be that a currency or commodity, for example.

Rules vary wildly by country because of the lack of pan-European legislation. But overall, local regulators across Europe are cracking down on trading venues that lack permission to offer brokerage services. In this context, ESMA has already proposed restrictions on cryptocurrency CFDs for retail investors, including lowering the maximum leverage that companies can offer.

But in April, the French government has announced a tax reform plan, which reduces the tax ‎rates on revenues generated by cryptocurrency transactions, and cut the high-band rate from ‎‎45 percent to 19 percent.‎

The stimulative effects of the tax cuts come as France changed the classification of ‎bitcoin and its ilk, which currently fall into the “moveable property” category, ‎meaning that it is subject the flat tax of 19 percent on capital gains. Before that, cryptocurrency gains ‎were considered “industrial and commercial profits” while occasional transactions ‎constituted as “non-commercial profits.”‎