ESMA itself said in a February statement that firms with derivatives marketed as “perpetual futures” are likely to fall under the existing product intervention measures on contracts for discrimination (CFDs). The commercial name, ESMA said, is irrelevant. Even voluntary negative balance protection does not change the analysis. If a perp meets the CFD definition, all CFD rules apply: leverage limits, a mandatory risk warning, margin closure, negative balance protection and prohibition of trade incentives. These restrictions are a heavy burden for licensed derivatives providers in Europe.
The offshore market is teeming with sharks
A European investor can open an account with Hyperliquid, the largest decentralized perp trading platform, and take Bitcoin exposure with 50x leverage. Other platforms, like Aster, offer up to 200x leverage on bitcoin. None of the platforms are approved under MiCA or the Markets in Financial Instruments Directive (MiFID), which covers derivatives trading in the EU. There is no EU enforceable loss limit, no key information document, no bonus ban and no closing rules, and they are available to anyone with a self-sufficient wallet and a few minutes of spare time.
And without these protections, retail investors almost always lose: when ESMA and national regulators reviewed the data in 2018, 74% to 89% of retail investment accounts lose money on CFDs across EU jurisdictions, with average losses per customer of between €1,600 and €29,000.
