The European Securities and Markets Authority (ESMA) issued a stern warning on Tuesday, February 24, 2026, to investment firms regarding the offering of crypto-linked derivatives. The regulator clarified that financial instruments often marketed as “perpetual futures” or “perpetual contracts” likely fall under the legal definition of Contracts for Differences (CFDs). This classification means these products are subject to existing national product intervention measures, regardless of the commercial labels firms use to describe them.
According to ESMA, the surge in leveraged exposure to crypto-assets like Bitcoin ($BTC) and Ethereum ($ETH) via these derivatives has triggered the need for stricter oversight. Under current EU rules, products meeting the CFD criteria must adhere to specific safeguards, including leverage limits, mandatory risk warnings, and negative balance protection. Additionally, firms are prohibited from offering monetary or non-monetary benefits to entice retail traders into these high-risk positions.
Strict distribution for complex crypto products
The regulator emphasised that firms cannot sidestep their obligations by adding features like “insurance funds” or funding rate mechanisms, as these do not change the underlying nature of the instrument. ESMA’s statement highlights that these complex products must only be offered to a “narrow target market”. Mass marketing campaigns, such as pop-ups or emails telling inexperienced investors to “get started now,” are considered inconsistent with these consumer protection requirements.
Furthermore, firms providing non-advised services must conduct thorough appropriateness assessments to ensure retail clients understand the risks involved. ESMA also warned providers to manage significant conflicts of interest, particularly when derivatives are issued by or traded on platforms belonging to the same corporate group.
Alignment with MiCA and previous warnings
This intervention comes as the Markets in Crypto-Assets (MiCA) framework reaches a critical transition phase in mid-2026. While MiCA provides a broader structure for the industry, ESMA continues to use its existing powers under the Markets in Financial Instruments Directive (MiFID II) to address immediate risks in the derivatives space.
The EU’s digital finance strategy is shifting from general oversight to a greater focus on detailed retail trading safety and enforcement. This is reflected in moves like The Hashgraph Group, a Swiss firm, launching its Hedera-based compliance supply chain platform, TrackTrace, in anticipation of the EU’s Digital Product Passport framework. This development aligns with and reinforces DeFi Planet’s prior reporting on regulatory developments in the bloc.
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