ESMA says crypto leverage products could face regulation

The European Union's financial market supervisor, the European Securities and Markets Authority (ESMA), has determined that derivatives offering cryptocurrency leverage could be subject to regulation. According to Cointelegraph, ESMA stated that derivatives linked to cryptocurrencies like Bitcoin and Ethereum, such as perpetual futures and perpetual contracts, could fall within the regulatory scope of Contracts for Difference (CFDs). The authority also requires firms to identify and manage potential conflicts of interest that may arise when offering these products. ESMA further explained that if these instruments are classified as CFDs, they could be subject to existing regulations, including leverage limits, mandatory risk warnings, and forced margin liquidations.