Europe’s top securities regulator has clarified that many leveraged cryptocurrency derivatives, including perpetual contracts, fall under existing strict rules for high-risk financial products. The European Securities and Markets Authority [ESMA] stated these instruments must be regulated as Contract for Difference [CFD] products, enforcing the bloc’s “same risk, same rules” doctrine for investor protection.
The European Securities and Markets Authority [ESMA] has reaffirmed that crypto derivatives offering leveraged exposure will be regulated under the same framework as traditional high-risk products. This reinforces the EU’s long-standing “same risk, same rules” doctrine for financial markets.
ESMA clarified that many crypto derivatives, particularly perpetual contracts, already fall within existing CFD product-intervention measures. The regulator’s public statement emphasizes that regulatory treatment depends on a product’s economic characteristics, not its name. Crypto derivatives providing leveraged exposure that mirror the risk profile of CFDs will be assessed under identical rules.
This means calling a product a “perpetual future” does not exempt it from EU regulation if its structure aligns with CFDs. Where crypto derivatives are deemed CFDs, national product intervention measures like leverage caps and negative balance protection apply.
The clarification has direct implications for firms offering leveraged crypto products to EU retail investors. Platforms must ensure compliance with both CFD intervention rules and broader MiFID II investor-protection obligations.
ESMA also highlighted that highly leveraged crypto derivatives typically have a very narrow target market. Firms are expected to conduct appropriateness assessments and avoid mass-market promotion exposing retail users to disproportionate risk.
Importantly, ESMA’s statement does not introduce new restrictions or announce a ban on crypto derivatives. It serves as a reminder that existing EU rules already apply based on a product’s substance rather than its presentation.
