EU Markets Watchdog Flags Crypto Perpetual Contracts as Potential CFDs

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The European Securities and Markets Authority has warned that many crypto perpetual derivatives may be captured by the European Union’s rules governing contracts for differences, tightening the regulatory net around leveraged digital asset products.

In guidance published Tuesday, ESMA said that derivatives offering ongoing leveraged exposure to cryptocurrencies — including products described as perpetual futures or perpetual contracts — are likely to fall under existing CFD intervention measures. The notice specifically referenced instruments linked to major tokens such as Bitcoin and Ethereum.

If a product meets the legal definition of a CFD, firms must adhere to a range of safeguards designed to protect retail investors. These include leverage restrictions, standardized risk disclosures, automatic margin close-out mechanisms and negative balance protection. Companies are also barred from offering financial or non-financial incentives tied to the sale of such products.

ESMA emphasized that providers should assess whether their crypto derivatives fall within the CFD framework and implement appropriate measures to prevent or mitigate conflicts of interest.