MasterCard and Visa - Crackdown on unregulated CFDs, Binary Brokers and ICOs



The card industry leaders - MasterCard and Visa decided to crack down on unregulated forex, CFDs, Binary Brokers and ICOs. This comes as a welcoming surprise for regulated brokers who have to deal with new stricter ESMA rules that the European regulator introduced this summer. From now on brokers and ICO issuers will have to play by the rules and provide services only in jurisdictions for which they hold appropriate licenses. MasterCard’s rules are already in place from this Monday. VISA has announced that they will force the same measures from the 1st of December.

What does it mean for unregulated brokers and ICOs?

Starting from the 12th of October every payment processor who is processing the transactions of a high-risk securities merchant must demonstrate to Mastercard (and from the 1st of December to Visa) that adequate due diligence has been applied. Brokers and ICO issuers will be required to present evidence of legal authority to operate in a given jurisdiction. If they fail to do so, the payments will not be processed.

Good news for scammed traders and investors

For people who already made a deposit to an unregulated broker via credit card, these two card providers bring more good news. Clients can make a chargeback on their payment for up to a year and a half (540 days) after the date of the transaction.


This is good news to the industry that could possibly limit the number of unregulated companies and scams that do whatever they want without any restrictions. While such entities will now probably convert to bank wires and other alternative payment methods, the number of people who makes a deposit via these two card providers is so huge that it could significantly limit the number of people who decide to trade with an illegally operating company. The likelihood that the other major card issuer will not follow these two huge card providers is very small.

Source: (1), (2), (3)


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