--- title: "Crypto trading with CFDs: bitcoin CFDs vs owning coins" description: "Crypto trading with CFDs in plain words: what a bitcoin CFD is, why you own no coin, the EU 2:1 retail cap, the UK ban, weekend gaps and financing costs." canonical: https://thetraderwiki.com/en/crypto-cfds/ lang: en kind: article published: 2026-09-30 updated: 2026-10-12 author: "Sebastian M." (https://thetraderwiki.com/en/authors/sebastian-m/) html: https://thetraderwiki.com/en/crypto-cfds/ json: https://thetraderwiki.com/en/crypto-cfds/index.json --- # Crypto trading with CFDs: how a bitcoin CFD differs from owning the coin [Home](https://thetraderwiki.com/en/) › [Guides](https://thetraderwiki.com/en/learn/) › [Crypto CFDs](https://thetraderwiki.com/en/crypto-cfds/) People often mix up the two forms of crypto trading. You can buy the coin itself on a crypto exchange and hold it in a wallet. Or you can trade a crypto [CFD](https://thetraderwiki.com/en/glossary/#cfd), a contract with a provider that pays out the change in the coin’s price without you ever owning a coin. Bitcoin CFDs follow the bitcoin price and ethereum CFDs follow the ether price. Both settle in ordinary money. Below, the two are set side by side. The page explains what a crypto CFD offers you, what it doesn’t offer, the rules regulators have put on it and the costs of holding one. Crypto prices swing harder than almost any other market. Most retail CFD accounts lose money. [ESMA](https://www.esma.europa.eu/), the EU’s markets regulator, reported national regulators’ findings that 74 % to 89 % of them did ([ESMA press release, 27 March 2018](https://www.esma.europa.eu/press-news/esma-news/esma-agrees-prohibit-binary-options-and-restrict-cfds-protect-retail-investors)). ## Key points - With a crypto CFD you’re placing a bet on price with your provider. There’s no coin, no wallet and nothing you can send to anyone. - If [the company that opens your account](https://thetraderwiki.com/en/broker-groups-and-regulators/) is regulated in the EU or Australia, [leverage](https://thetraderwiki.com/en/glossary/#leverage) on crypto CFDs is capped at 2:1 for [retail clients](https://thetraderwiki.com/en/glossary/#retail-client). You must deposit at least half the value of the trade ([ESMA Decision (EU) 2018/796](https://eur-lex.europa.eu/eli/dec/2018/796/oj), [ASIC 20-254MR](https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-254mr-asic-product-intervention-order-strengthens-cfd-protections/)). - Firms in the UK can’t sell crypto CFDs to retail clients at all. The ban on crypto derivatives started on 6 January 2021 ([FCA PS20/10](https://www.fca.org.uk/publications/policy-statements/ps20-10-prohibiting-sale-retail-clients-investment-products-reference-cryptoassets)). - Financing is charged every night you hold a crypto CFD, weekends included. A trade held for a long time therefore costs far more than one held briefly. - Crypto markets never close, though your provider’s crypto CFD may pause. When trading restarts after a pause, a price [gap](https://thetraderwiki.com/en/glossary/#gap-risk) can appear. - Global companies regulated outside the EU, the UK and Australia advertise much higher crypto leverage. A higher ratio means a smaller price move wipes out your deposit. ## What is a crypto CFD? A crypto CFD is a contract between you and a provider tied to a cryptocurrency’s price. You open the trade at one price, close it at another and the provider pays or charges you the cash difference. The most common ones track bitcoin and ether against the US dollar. Many providers also offer smaller coins, such as XRP, solana, cardano, litecoin and dogecoin. Your [counterparty](https://thetraderwiki.com/en/glossary/#counterparty), the other side of the contract, is the provider, and no coin changes hands at any point. You can open a trade that gains when the price rises, or a [short position](https://thetraderwiki.com/en/glossary/#short-position) that gains when it falls. The mechanics are covered step by step on the [what are CFDs](https://thetraderwiki.com/en/what-are-cfds/) page. The deposit you put down is called [margin](https://thetraderwiki.com/en/glossary/#margin), and it’s a fraction of the trade’s full value. Because your gain or loss is worked out on the full value, it’s large compared with the deposit ([leverage and margin](https://thetraderwiki.com/en/leverage-and-margin/)). ## Crypto CFD vs owning the coin A crypto CFD tracks the same price as owning the coin, but almost everything else is different. *How a crypto CFD compares with buying the coin on a crypto exchange.* | Question | Crypto CFD | Owning the coin | | --- | --- | --- | | What you hold | A contract with your provider | The coin itself | | Wallet and private keys | None needed | You keep the keys, or an exchange keeps them for you | | Trading on a fall | Built in: you open a short trade | Not possible by simply holding | | Leverage | Yes, up to the limit of the company that opens your account | None when you pay in full | | Cost of holding | [Overnight financing](https://thetraderwiki.com/en/glossary/#overnight-financing) every night | No nightly charge | | Main thing that can go wrong besides price | Your provider closes your trade when margin runs low | Lost keys, theft, or an exchange that fails | ## No wallet and no ownership: what that means The biggest difference is ownership. With a CFD you have a claim on your provider for the money in your account, and that’s all. There is no coin to withdraw, move to your own wallet or pay anyone with. Not having a wallet removes some risks and introduces others. You can’t lose a private key, and you can’t send coins to the wrong address. But your money now depends on the provider staying solvent and treating you fairly. So the provider’s licence matters more than anything about the coin ([how to check a licence](https://thetraderwiki.com/en/is-forex-and-cfd-trading-safe/#check-a-regulated-broker)). ## Where can you trade crypto CFDs, and at what leverage? Crypto CFD rules for retail clients change based on which company holds your account and where that company is regulated. A group usually picks that company by where you live. Three regimes cover most readers of this page. ### The EU: a 2:1 cap The EU cap on cryptocurrency CFDs is 2:1, an initial margin of 50 %, and it’s the lowest of the five leverage limits ESMA set ([ESMA Decision (EU) 2018/796](https://eur-lex.europa.eu/eli/dec/2018/796/oj)). This cap applies if the company that opens your account is regulated in the EU. The same measures bring [margin close-out](https://thetraderwiki.com/en/glossary/#margin-close-out), where your provider closes your trades once your account falls too low. They also bring [negative balance protection](https://thetraderwiki.com/en/glossary/#negative-balance-protection), so you can’t lose more than you paid in. In February 2026, ESMA reminded EU firms that perpetual [futures](https://thetraderwiki.com/en/glossary/#futures-contract) on crypto-assets, contracts with no end date, fall under the CFD measures when they meet the CFD definition ([ESMA, 24 February 2026](https://www.esma.europa.eu/press-news/esma-news/esma-reminds-firms-their-obligations-under-cfd-product-intervention-measures)). ### Australia: the same 2:1 cap Australia’s cap on CFDs referencing crypto-assets is also 2:1 for retail clients of companies regulated in Australia. [ASIC](https://asic.gov.au/), the Australian regulator, introduced the limit from 29 March 2021, along with margin close-out and negative balance protection ([ASIC 20-254MR](https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-254mr-asic-product-intervention-order-strengthens-cfd-protections/)). ### The UK: a ban for retail clients The UK ban goes further than a cap. Since 6 January 2021, firms acting in or from the UK can’t sell, market or distribute CFDs, futures or options on cryptoassets to retail clients ([FCA PS20/10](https://www.fca.org.uk/publications/policy-statements/ps20-10-prohibiting-sale-retail-clients-investment-products-reference-cryptoassets)). The [FCA](https://www.fca.org.uk/) gave four reasons for the ban. One is that cryptoassets have no reliable basis for valuation. Another is that market abuse and financial crime are common in crypto markets. Cryptoasset prices are also extremely [volatile](https://thetraderwiki.com/en/glossary/#volatility), meaning they swing hard. Last, retail consumers don’t understand the products well enough and have no clear need to invest in them. The original ban extended to exchange-traded notes, listed investments that follow a crypto price. From 8 October 2025 the FCA allowed retail clients to access those again, but said its ban on retail access to cryptoasset derivatives stays in place ([FCA, 1 August 2025](https://www.fca.org.uk/news/press-releases/fca-opens-retail-access-crypto-etns)). [Professional clients](https://thetraderwiki.com/en/glossary/#professional-client) fall outside the ban. ## A worked example: one coin as a CFD and owned outright *Illustrative figures: a made-up example, not a forecast or a quote.* A worked example with made-up numbers shows the difference. One coin costs 40,000. You can buy one coin outright, or you can open a CFD on one coin with a margin of 50 %. The provider charges financing of 15 % a year on the full value. After 30 nights the price has fallen 10 % to 36,000. *Example result after 30 nights for one coin bought at 40,000, as a CFD on 50 % margin and owned outright.* | Item | CFD | Owning the coin | | --- | ---: | ---: | | Money you put in | 20,000 | 40,000 | | Loss from the price fall | 4,000 | 4,000 | | Financing, 30 nights (40,000 × 15 % ÷ 365 × 30) | 493.15 | 0.00 | | Total loss | 4,493.15 | 4,000.00 | | Loss as a share of the money you put in | 22.5 % | 10 % | The price move is the same on both sides, but the CFD loses more because of financing. Its loss is also more than twice as large against the money put in. The example leaves out the [spread](https://thetraderwiki.com/en/glossary/#spread), the gap between the buy and sell price, which both routes pay. ## What financing costs on a crypto CFD Financing on a crypto CFD is a nightly charge on the full value of your trade. Your provider applies the charge at its daily cut-off for every night the trade stays open, Saturday and Sunday included. Providers set their own crypto rates, which are usually far higher than the rates on currency or index CFDs. Short trades often pay too. The charge grows the longer you hold a trade, so it matters little for a trade closed the same day but a lot for one held for months. A holder of the real coin pays nothing per night. Your provider publishes the rate for each coin. The [costs and fees](https://thetraderwiki.com/en/costs-and-fees/#financing-formula) page shows how to turn a yearly rate into a nightly amount. The other cost comes from spreads. Measured against the price, the spread on a crypto CFD is usually several times the spread on a major currency pair, and it widens when [liquidity](https://thetraderwiki.com/en/glossary/#liquidity) is low. Low liquidity means few buyers and sellers. That is common at weekends. ## Weekend trading and price gaps Weekend trading happens in crypto since coins are traded every hour of every day. Many providers quote their crypto CFDs through the weekend for that reason. Hours still differ between providers, because some pause for maintenance or close for part of the weekend. Each provider’s contract details show the exact times. A pause matters because the coin doesn’t stop moving while the CFD is closed. When pricing resumes, the CFD can open a long way from its last level. A [stop-loss](https://thetraderwiki.com/en/glossary/#stop-loss) is an order to close your trade at a set price, and it fills at the first available price after the gap. That price can be worse than the one you chose ([stop-loss orders](https://thetraderwiki.com/en/stop-loss-orders/)). ## Offshore leverage on crypto: what the bigger number means > **Risk warning.** Offshore leverage on crypto CFDs is often many times the 2:1 limit that EU and Australian rules set for companies regulated there ([ESMA Decision (EU) 2018/796](https://eur-lex.europa.eu/eli/dec/2018/796/oj), [ASIC 20-254MR](https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-254mr-asic-product-intervention-order-strengthens-cfd-protections/)). Where no such caps exist, licensed companies choose their own limits. The higher the ratio, the smaller the price move that wipes out your deposit, and crypto prices often make large moves. > > An account held with a global company sits outside the oversight of the regulators that supervise the group’s EU, UK or Australian companies. Whether negative balance protection applies depends on the company and its licence. The [maximum leverage](https://thetraderwiki.com/en/maximum-leverage/#offshore) page shows how one brand can offer different limits through different companies. ## What to check on a crypto CFD account Start by checking who holds your crypto CFD account, and finish by finding out what it costs to keep a trade open. - **The company and its licence.** Identify the legal name of the company that would hold your account and check it on the regulator’s own register ([how to check a licence](https://thetraderwiki.com/en/is-forex-and-cfd-trading-safe/#check-a-regulated-broker)). - **The margin for each coin.** Providers can ask for more than the legal minimum, and they often do so with smaller coins. - **The nightly financing rate** for long and short trades, and whether it’s charged at weekends. - **Trading hours and pauses**, so you know when a gap can form. - The [compare brokers](https://thetraderwiki.com/en/compare-brokers/) page lays out what each listed provider publishes on these points, without ranking them. ## Common questions about crypto trading and CFDs Questions about crypto trading with CFDs mostly relate to ownership, legality and risk. ### What is crypto trading? Crypto trading means you buy and sell cryptocurrencies or contracts tied to their prices, aiming to gain from price movements. You can buy the coin on a crypto exchange and own it. Or you can trade a derivative like a CFD, which tracks the cryptocurrency’s price and does not give you the coin. ### What is a bitcoin CFD? With a bitcoin CFD you enter a contract with a provider. The contract pays or charges you the difference in bitcoin’s price from when you open the trade to when you close it. You put down a margin deposit and never hold any bitcoin. You can trade on a rise or a fall. Your provider charges financing for every night you hold the contract. ### Do you own bitcoin when you trade a bitcoin CFD? No, a bitcoin CFD gives you no bitcoin. You hold a contract with the provider, nothing else, so you can’t withdraw coins, move them to a wallet or spend them. ### How does an ethereum CFD work? An ethereum CFD works like a bitcoin CFD, using the ether price instead of the bitcoin price. Your gain or loss is the price change multiplied by the size, after you choose a direction and a size and put down margin. The same 2:1 retail cap applies to every cryptocurrency CFD at a company regulated in the EU or Australia, whichever coin it follows ([ESMA Decision (EU) 2018/796](https://eur-lex.europa.eu/eli/dec/2018/796/oj), [ASIC 20-254MR](https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-254mr-asic-product-intervention-order-strengthens-cfd-protections/)). ### Can you trade bitcoin CFDs in the UK? Firms in the UK can’t sell bitcoin CFDs to retail clients. The FCA banned firms acting in or from the UK from selling, marketing or distributing cryptoasset derivatives to retail clients from 6 January 2021 ([FCA PS20/10](https://www.fca.org.uk/publications/policy-statements/ps20-10-prohibiting-sale-retail-clients-investment-products-reference-cryptoassets)). It confirmed in 2025 that the ban remains in place ([FCA, 1 August 2025](https://www.fca.org.uk/news/press-releases/fca-opens-retail-access-crypto-etns)). Professional clients are outside the ban. ### Why is crypto so volatile? Crypto is volatile, with prices moving sharply. The swings happen partly because there’s no agreement on what a coin is worth. The FCA says cryptoassets have no reliable basis for valuation and that market abuse is common ([FCA PS20/10](https://www.fca.org.uk/publications/policy-statements/ps20-10-prohibiting-sale-retail-clients-investment-products-reference-cryptoassets)). A share brings earnings, and a currency has a central bank behind it, but a coin has neither, so its price depends on what buyers think others will pay. ### How does forex trading compare with crypto trading? Forex trading and crypto trading differ most in how much prices move and in the rules. For retail clients of a company regulated in the EU, major currency pairs are capped at 30:1, while cryptocurrencies are capped at 2:1 ([ESMA Decision (EU) 2018/796](https://eur-lex.europa.eu/eli/dec/2018/796/oj)). This is because crypto prices swing far more than currency prices. Currency markets close at the weekend, but crypto markets stay open. Spreads and financing are usually much higher on crypto CFDs ([forex trading](https://thetraderwiki.com/en/forex-trading/)). ## Sources The original documents this page cites, in the order they first appear. 1. [European Securities and Markets Authority](https://www.esma.europa.eu/), ESMA 2. [ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors](https://www.esma.europa.eu/press-news/esma-news/esma-agrees-prohibit-binary-options-and-restrict-cfds-protect-retail-investors), ESMA, 2018-03-27 3. [ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union](https://eur-lex.europa.eu/eli/dec/2018/796/oj), Official Journal of the European Union (EUR-Lex), 2018-05-22 4. [20-254MR ASIC product intervention order strengthens CFD protections](https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-254mr-asic-product-intervention-order-strengthens-cfd-protections/), ASIC, 2020-10-23 5. [PS20/10: Prohibiting the sale to retail clients of investment products that reference cryptoassets](https://www.fca.org.uk/publications/policy-statements/ps20-10-prohibiting-sale-retail-clients-investment-products-reference-cryptoassets), FCA, 2020-10-06 6. [ESMA reminds firms of their obligations under CFD product intervention measures amid rising offerings of perpetual futures](https://www.esma.europa.eu/press-news/esma-news/esma-reminds-firms-their-obligations-under-cfd-product-intervention-measures), ESMA, 2026-02-24 7. [Australian Securities and Investments Commission](https://asic.gov.au/), ASIC 8. [Financial Conduct Authority](https://www.fca.org.uk/), FCA 9. [FCA opens retail access to crypto ETNs](https://www.fca.org.uk/news/press-releases/fca-opens-retail-access-crypto-etns), FCA, 2025-08-01 ## Related pages - [Share CFDs and crypto CFDs: the tightest caps](https://thetraderwiki.com/en/shares-and-crypto-cfds/): Share CFDs: commission, dividends, borrow costs, results gaps. Crypto CFDs: the EU 2:1 cap, weekends and bans. - [What is leverage in trading? Leverage and margin](https://thetraderwiki.com/en/leverage-and-margin/): What leverage does to your buying power, the margin terms your platform uses and who sets the limits. - [Maximum leverage: what “up to 500:1” really means](https://thetraderwiki.com/en/maximum-leverage/): Why the leverage a provider advertises isn’t the leverage you get, and what you give up to reach it. - [Is forex and CFD trading safe, legal or a scam?](https://thetraderwiki.com/en/is-forex-and-cfd-trading-safe/): Legal in most countries, risky everywhere: how to tell a real product from a fraud, country by country. - [CFD and forex broker comparison: leverage and platforms](https://thetraderwiki.com/en/compare-brokers/): Six brokers in nineteen countries, compared on facts you can check yourself. --- CFDs are complex, leveraged products, and the regulators’ own figures show that most retail accounts lose money. Nothing on TheTraderWiki is investment advice. Read the full [risk disclosure](https://thetraderwiki.com/en/risk-disclosure/), and if you’re unsure, talk to a qualified adviser. Broker details can change and they can be wrong. Before you open an account, confirm them with the broker and the regulator’s register.