ESMA: Crypto Perpetuals Likely Fall Under EU CFD Rules
The European Securities and Markets Authority (ESMA) issued a notice on Tuesday reminding firms that leveraged crypto-linked derivatives marketed as “perpetual futures” or “perpetual contracts” likely fall within the European Union’s product intervention measures for contracts for differences (CFDs).
ESMA said that derivatives tied to cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) may be captured by CFD rules and urged companies to take appropriate steps to identify, prevent, or manage conflicts of interest that could arise from offering these products.
According to the regulator, where such derivatives meet the definition of a CFD, they are subject to applicable product intervention requirements, including leverage limits, a mandatory risk warning, margin close-out, negative balance protection, and a prohibition on monetary and non-monetary benefits available at pagead2.googlesyndication.
ESMA, established in 2011 to support investor protection and market integrity, oversees compliance with the region’s Markets in Crypto-Assets (MiCA) framework. The agency has issued previous communications related to digital assets, including a January publication addressing financial influencers potentially promoting volatile cryptocurrencies.
Bill Hughes, senior counsel and director of global regulatory matters at Consensys, said on X that the statement signals close regulatory scrutiny of leveraged crypto-derivatives in Europe. He noted that rebranding a product as a “perpetual future” would not exempt it from CFD restrictions if its characteristics fit the definition, and advised firms offering leveraged derivatives to EU retail clients to reassess product analysis, distribution, and governance to ensure compliance.
Kraken unveils “perpetual futures” offering amid ESMA notice
Separately on Tuesday, cryptocurrency exchange Kraken announced it had listed “perpetual futures” tracking tokenized versions of major equity indices, gold-backed ETFs, and leading public companies. The products will be available to residents of more than 110 countries outside the United States. A Kraken spokesperson said the product is not available to EU clients at launch.
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