ESMA Reclassifies Perpetual Futures as CFDs, Triggering EU Regulatory Crackdown

On 24 February 2026, the European Securities and Markets Authority determined that any perpetual future meeting the CFD definition must be regulated as such, regardless of its commercial name. This ruling imposes a 2:1 leverage cap, negative balance protection, margin close-out rules, and a ban on bonuses for retail clients across Europe.

CySEC moved to enforce this classification on 10 June 2026, issuing a notice to licensed firms that spot-quoted futures and perpetual futures sold to retail clients must be treated as CFDs, explicitly naming perpetual futures for the first time. CySEC regulates the largest concentration of CFD brokers in the EU, meaning its actions effectively shift the entire European retail market. The UK’s FCA has already banned crypto derivatives for retail clients outright, a ban confirmed still in place for 2026.

The regulatory shift pushes high-leverage perpetual futures further offshore. Perpetual futures traded tens of trillions of dollars in 2025, almost entirely on venues outside EU jurisdiction. Offshore licenses from regulators like Seychelles require capital as low as $100,000, while Comoros’ MISA offers approval on nominal capital with no office requirement. Some firms exploit this by displaying a CySEC logo for trust while routing trades through a Mwali entity where leverage reaches 100x and no compensation fund exists.

The US has taken a contrasting approach. In June 2026, it scrapped rules requiring firms to remain silent after settlements and approved Kalshi’s Bitcoin perpetual contract within a day. Meanwhile, CySEC has also built an onshore alternative. In March 2026, it expanded permissions for the authorized venue Perpetuals.com to execute client orders directly, offering a MiFID II-compliant market with defined risk, mandatory stop barriers, and investor protections.

The perpetual future remains the most liquid product in crypto, and demand is real. The key question for retail traders is whether their position rests on a regulated floor with a compensation fund or on an offshore venue with minimal oversight.