Regulatory Risk: Cryptocurrencies are alternatives to traditional fiat currencies issued by governments and the anonymity of cryptocurrencies means that they may be used to facilitate money laundering or other illegal activities. As a result, governments may seek to regulate, restrict or ban the use and sale of cryptocurrencies, and some have already taken this approach. Any such regulatory action may impact the value of cryptocurrencies.
Cryptocurrency Exchanges: ADSS’s prices for its cryptocurrency CFDs are provided by its Liquidity Provider, ADSS Securities LLC, which sources its prices from a number of cryptocurrency exchanges. Cryptocurrency exchanges are entirely digital and are at risk from hackers, malware and operational glitches. If a cryptocurrency exchange is hacked, there is no authority to resolve disputes and this is particularly problematic as all cryptocurrency transactions are irreversible.
Cryptocurrency exchange servers are unreliable, which can result in the suspension of markets, and cryptocurrency exchanges and may impose restrictions on funding and withdrawals. If a cryptocurrency exchange is hacked or unavailable, this may impact the value of cryptocurrency CFDs and ADSS may restrict your ability to purchase or sell such cryptocurrency CFDs in such circumstances.
Blockchain Forks: In respect of each cryptocurrency, there is one generally accepted decentralised ledger that records all cryptocurrency transactions called the “blockchain”. When the software of participants in the relevant cryptocurrency network (known as “miners”) becomes misaligned, a split (or “fork”) in the relevant blockchain may occur thereby resulting in two different blockchains.
Generally, miners for the relevant cryptocurrency quickly agree which version of the blockchain to continue to use, causing minimal disruption, and the less favoured version of the blockchain is discontinued. However, when one version is not discontinued (known as a “hard fork”) ADSS shall determine, in its sole and absolute discretion, which blockchain and cryptocurrency unit to follow. When a hard fork occurs, this may cause substantial price volatility to the relevant cryptocurrency CFDs. Also, if a hard fork results in a viable second cryptocurrency, ADSS may, in its sole and absolute discretion, create an equivalent position on a client’s account to reflect this but, ADSS has no obligation to do so.
Closing Only Trading: At any point in time, ADSS may, in its sole and absolute discretion, switch cryptocurrency CFD trading to “Closing Only”. When “Closing Only” is applied, new cryptocurrency CFDs positions cannot be opened and existing positions can only be maintained or closed. Although, ADSS may apply “Closing Only” without providing any reason or justification for this decision, this may occur to facilitate ADSS complying with its own internal market risk limits.