ESMA itself said in a February statement that companies whose derivatives are marketed as “perpetual futures” are likely to fall foul of existing product intervention measures on contracts for difference (CFDs). The trade name, ESMA said, is irrelevant. Even voluntary protection against a negative balance does not change the analysis. If a person meets the definition of CFDs, all CFD rules apply: leverage limits, mandatory risk warning, margin closure, negative balance protection and prohibition of trading incentives. These restrictions represent a heavy burden for derivatives providers approved in Europe.
The offshore market is full of sharks
A European investor can open an account with Hyperliquid, the largest decentralized perp trading platform, and gain exposure to Bitcoin with 50x leverage. Other platforms, like Aster, offer up to 200x leverage on Bitcoin. Neither platform is authorized under MiCA or the Markets in Financial Instruments Directive (MiFID), which covers derivatives trading in the EU. There are no loss limits that the EU can impose, no key information documents, no bonus bans and no closing rules, and they are accessible to anyone with a self-custody wallet and a few minutes of free time.
And without these protections, retail investors almost always lose out: when ESMA and national regulators reviewed the data in 2018, 74% to 89% of retail investment accounts lost money on CFDs across EU jurisdictions, with average losses per client ranging from €1,600 to €29,000.
