I’ve had a few friends trading crypto FNO, and the thing is, the excitement often hides the real risks. People see 200x leverage and act like it’s gonna make super money, when it usually ends in something terrible.
Crypto derivative exchanges exist in regulatory limbo. A bit like Schrödinger’s cat—neither fully regulated nor unregulated. This ambiguity is being exploited in dangerous ways. By the way, I am not referring to the actual buying and selling of Cryptocurrency.
The first risk with unregulated platforms is, of course, that there’s nothing you can do if something goes wrong.
The other big problem with crypto F&O is that you have no idea who’s on the other side of your order. In many cases, the platform itself can be the counterparty to all trades, like dabba trading or CFDs. If the platform is the house, the incentives are distorted. It’s good for the platform if the customer loses money because every customer win is the platform’s loss.
To make matters worse, these platforms offer 100 to 200x leverage. At that level, even a small move is enough to make you go bust. Considering the volatile nature of crypto, this is all but guaranteed.
The lack of regulatory clarity on crypto derivatives is not a good thing in the long run for anyone and has to be fixed.