• The European Securities and Markets Authority (ESMA), the financial markets regulator and supervisor in the European Union, issued a notice to remind entities to assess investment vehicles providing leverage exposure to cryptocurrencies. • In a Tuesday notice, ESMA said that derivatives products, including those marketed as “perpetual futures or perpetual contracts” tied to cryptocurrencies like Bitcoin (BTC) or Ether (ETH), likely fall within the scope of intervention measures applied to contracts for differences, or CFDs. • The EU Authority warned companies to “take appropriate steps to identify, prevent, or manage conflicts of interest that may arise from the offering of these products.” “Where these derivatives meet the definition of a CFD, they are subject to the applicable product intervention requirements, including leverage limits, a mandatory risk warning, a margin close-out and negative balance protection, and the prohibition of monetary and non-monetary benefits,” said ESMA. • The EU agency, which tracks compliance with the region’s Markets in Crypto Assets (MiCA) framework, was established in 2011 as part of oversight into investor protection in financial markets. • ESMA has issued similar warnings to entities tied to digital assets, including a January publication targeting financial influencers potentially promoting “volatile cryptocurrencies.” Related: Telegram CEO faces Russia probe over allegations of terrorism facilitation Bill Hughes, senior counsel and director of

Article Summaries:

  • European Securities and Markets Authority (ESMA) has warned that crypto‑perpetual futures and contracts are likely to be classified as contracts for difference (CFDs). In a notice issued on Tuesday, ESMA urged firms to evaluate leveraged crypto products and ensure compliance with CFD intervention rules, including leverage limits, mandatory risk warnings, margin close‑outs, negative‑balance protection, and prohibition of monetary or non‑monetary benefits. The regulator also cautioned companies to manage potential conflicts of interest. Consensys’ senior counsel noted that rebranding a product as a “perpetual future” does not exempt it from CFD restrictions. Meanwhile, Kraken announced new perpetual futures for non‑EU clients, explicitly excluding EU residents at launch.

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