ESMA itself said in a February statement that companies with derivatives traded as “perpetual futures” would likely fall under existing product intervention measures in contracts for differences (CFDs). The commercial name, ESMA stated, is irrelevant. Even voluntary negative balance protection does not alter the analysis. If a criminal meets the CFD definition, all CFD rules apply: leverage limits, a mandatory risk warning, margin closure, negative balance protection and a ban on trading incentives. These restrictions place a heavy burden on derivatives providers authorized in Europe.
The offshore market is full of sharks
A European investor can open an account on Hyperliquid, the largest decentralized criminal trading platform, and gain exposure to Bitcoin with 50x leverage. Other platforms, such as 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 is no loss limit that the EU can impose, no key information document, no bonus ban, and no shutdown rule, and they are available to anyone with a self-custody wallet and a few minutes of free time.
And without those protections, retail investors almost always lose: when ESMA and national regulators reviewed the data in 2018, between 74% and 89% of retail investment accounts lost money on CFDs across EU jurisdictions, with average losses per client ranging between €1,600 and €29,000.
