ESMA Proposes Stricter Oversight for Crypto Derivatives as CFDs

The European Securities and Markets Authority (ESMA) has taken a significant step in regulating cryptocurrency derivatives, proposing that they be classified as Contracts for Difference (CFDs). This move would subject these products to the existing EU regulatory framework, which includes leverage limits, risk warnings, and orderly liquidation procedures.

According to ESMA's analysis, derivatives such as perpetual futures share critical economic features with regulated CFDs. As a result, the authority proposes that these crypto-based instruments fall under the same comprehensive regulatory framework established under the European Union's Markets in Financial Instruments Directive (MiFID II).