The European Securities and Markets Authority (ESMA) has issued a formal warning to investment firms, saying that crypto-asset derivatives marketed as “perpetual futures,” “perpetual swaps,” or “rolling contracts” are likely to fall under the regulatory framework for Contracts for Differences (CFDs) if they provide leveraged exposure and are cash-settled.
ESMA stressed that the commercial label attached to a product does not determine its legal treatment. In practice, if a product gives investors leveraged economic exposure to an underlying crypto asset such as bitcoin or ethereum, existing national product intervention measures may apply regardless of how firms name or promote it. That would place these products under the same investor protection regime that governs CFDs in the EU.
Focus on retail investor protection
The regulator said it has seen a sharp increase in the offering of leveraged perpetual contracts tied to crypto-assets. Its concern is that some firms may be using the “perpetual” label to avoid CFD restrictions while still offering substantially similar high-risk products to retail clients. According to the report, some platforms have processed more than $1.2 trillion in monthly perpetual trading volume, often paired with leverage levels above those typically allowed in the EU for retail users.
By treating such products as CFDs, ESMA is effectively extending the stricter protections introduced in 2018 to a fast-growing segment of the crypto derivatives market. The agency said firms must carry out careful legal analysis and cannot rely on branding alone to escape regulatory obligations.
Closing a regulatory gap alongside MiCA
ESMA’s statement also clarifies the relationship between Europe’s crypto framework and existing financial rules. While MiCA governs the broader crypto-asset market, ESMA said this issue concerns how current MiFID II and CFD rules apply to derivatives. In other words, the move is aimed at closing a possible loophole for speculative instruments rather than creating an entirely new regime.
If firms continue offering crypto perpetual products to retail investors without the required CFD protections, national competent authorities across the EU may impose sanctions, fines, or force the withdrawal of non-compliant products. The message from ESMA is clear: high-leverage crypto derivatives aimed at retail traders are coming under tighter scrutiny in Europe.