ESMA has issued a new public statement warning that some leveraged derivatives marketed as “perpetual futures” or “perpetual contracts” — including crypto-linked products — may fall under national CFD product intervention rules in the EU. The regulator says firms must assess products based on how they work, not what they are called.
The statement, published on February 24, is aimed at both firms and national regulators and also highlights broader MiFID II investor protection requirements that apply to leveraged products sold to retail clients.
ESMA says product names do not decide the legal category
ESMA says it is seeing increased offerings of derivatives marketed as perpetual futures or perpetual contracts that give leveraged exposure to underlying assets, including crypto-assets such as Bitcoin and Ethereum. It warns these instruments are likely to fall within the scope of national product intervention measures on CFDs if they meet the CFD definition used in the original ESMA decision and mirrored by national authorities.
The regulator is explicit that the commercial name is “irrelevant” for MiFID II categorisation. In practice, firms are expected to perform a careful legal analysis of each product’s features and settlement mechanics to determine whether the CFD restrictions apply.
What would bring a product into CFD scope
ESMA says a derivative that gives exposure to an underlying value and is not exclusively physically settled would likely fall within the CFD intervention measures unless it fits one of the excluded product types in the ESMA definition. The statement also notes that certain features do not change that assessment.
According to ESMA, factors that are not decisive include:
- whether the product trades on a venue,
- whether it has a funding-rate mechanism,
- or whether the firm voluntarily adds protections like negative balance protection or “insurance funds.”
That matters for crypto firms because many perpetual products are marketed around those exact features.
ESMA also flags retail investor protection duties
Beyond the CFD scope question, ESMA reminds firms that key MiFID II investor protection obligations apply to leveraged derivatives generally, even if a product ends up outside the specific CFD intervention rules. The regulator says this is especially important for complex, risky products sold to retail clients.
ESMA specifically highlights:
- Product governance: firms should define a narrow target market and align distribution accordingly, given leverage and margin risks.
- Marketing limits: ESMA says mass marketing campaigns, broad “get started now” messages, and promotions aimed at inexperienced investors are not consistent with a narrow target market.
- Appropriateness checks: firms must carry out appropriateness assessments for non-advised services involving derivatives.
Conflicts, PRIIPs, and compliance documentation are in focus too
ESMA also flags conflicts of interest, especially where the derivative is issued by a group entity or traded on a group-owned venue, which could create incentives to push these products to clients.
Finally, the regulator says so-called perpetual futures/contracts are packaged investment products under PRIIPs, meaning firms distributing them to retail clients must prepare a Key Information Document (KID).
In short, ESMA’s message is not just about naming. It is about product design, retail distribution controls, and whether firms can document that they assessed these instruments correctly under EU rules.
Why it matters for crypto
- EU-facing crypto firms cannot assume “perpetual futures” branding avoids CFD-style restrictions.
- Product structure and settlement mechanics now matter more than naming in compliance reviews.
- Retail distribution of leveraged crypto derivatives faces tighter scrutiny on targeting and marketing practices.
- Firms may need stronger legal analysis, product governance files, and audit trails before offering these products in the EU.
- PRIIPs KID requirements add another documentation layer for retail-facing perpetual products.
What to watch next
- Whether national EU regulators issue follow-up guidance or enforcement actions tied to crypto perpetuals.
- How EU brokers/exchanges adjust product naming, settlement design, and retail access controls.
- Updates to onboarding and appropriateness testing for leveraged crypto derivatives.
- Whether more firms restrict mass marketing of perpetual products to retail clients in Europe.
- Any industry clarification on which perpetual structures are most likely to be treated as CFDs.