Updated Jul 1, 2026, 2:33 p.m. Published Jul 1, 2026, 2:00 p.m. 4 min readWith the end of MiCA’s transitional period fast approaching, the European Union is finally cracking down on unlicensed crypto exchanges in an effort to purge the continent’s spot markets of rogue operators and protect European investors. But a dangerous loophole remains wide open that could whisk users away from regulated spot trading and into high-risk offshore derivatives platforms likely to wipe out their capital.Regulators in the EU have set a July 1 deadline for unauthorized crypto asset service providers to wind down operations, but the enforcement crackdown only applies to spot trading. Crypto derivatives, including perpetual futures (also called “perps”), are not covered under MiCA’s jurisdiction. That would be a defensible position for regulators to take if perps were a harmless product that was carefully policed by another authority. They’re neither. The majority of crypto trading volume — roughly 80% according to data from Glassnode — takes place in the crypto perpetual futures market. A crypto perpetual is effectively a contract of difference. Traders post margin and take leveraged directional exposure to a price they never actually own. The difference between those prices is then settled in cash.Patrick Gruhn is founder and chief executive of Perpetuals.com.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 difference (CFDs). The commercial name, ESMA said, is irrelevant. Even voluntary negative-balance protection does not alter the analysis. If a perp meets the CFD definition, all CFD rules apply: leverage limits, a mandatory risk warning, margin close-out, negative balance protection and a ban on trading incentives. Those restrictions are a heavy burden on licensed derivatives providers in Europe.The offshore market is teeming with sharksA European investor can open an account at 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. Neither platform is authorized under MiCA or the Markets in Financial Instruments Directive (MiFID), which covers derivatives trading in the EU. There’s no loss limit that the EU can enforce, no key information document, no bonus ban, and no close-out rule, and they’re 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, 74% to 89% of retail investment accounts lose money on CFDs across EU jurisdictions, with average losses per client ranging from €1,600 to €29,000.My own research on a large dataset of real crypto perpetual futures activity finds retail loss rates in the same range, with the clear majority of accounts losing and a striking share of capital wiped out entirely. The empirical predicate by which ESMA restricted CFDs is present fully and independently in crypto perps. Europe decided that the product was too dangerous to sell without restrictions, and yet it is being sold to those same Europeans with many times higher leverage on offer than the limit by companies that are not covered by the regulations at all. This presents a legal problem in Europe: while Article 61 of MiCA says a third-country firm may not provide or solicit MiCA services to EU clients except at the client's own exclusive initiative, the derivatives law, MiFID, has no equivalent single prohibition. Its third-country regime is split by client type and is mostly toothless as an EU-level rule.ESMA’s own consumer warning for European crypto perp traders is blunt: check your provider, know exactly which legal entity you are dealing with, and understand that an offshore brand will not offer you any protection. That’s good advice. It is also, almost verbatim, the case for enforcing MiFID against offshore perps where the stakes for investors are higher, because leverage is involved and MiCA’s spot products carry none.There is a real risk that the European retail traders are worse off, not safer, after MiCA’s transitional period ends on July 1. When users are pushed off unlicensed spot venues, while keeping unlicensed 50x perp venues a single click away, you have not protected anyone; you have simply funneled them from a product with no leverage towards the most dangerous product in the market.It is not only a problem for trader protection, but is also inherently unfair competition. As European providers are required to obey the rules, follow extensive compliance rules and regulations, and spend significant amounts of money for compliance and user protection, while offshore platforms are offering their services to European users for a fraction of the costs and a larger slice of the pie.Jeffrey Sprecher, founder, chair and CEO of Intercontinental Exchange (ICE) said it best when he labeled Hyperliquid as being "bigger than NASDAQ" with only a staff of "11 people," whom he called "very, very smart people." This month, Europe has demonstrated it can make the world’s biggest exchanges respect its rules. The bigger — and arguably more important — test is if it will do the same for the products that can wipe out a retail trader in a single afternoon.Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.12345678910Building the Zcash Machine: Tachyon and Quantum ReadinessBuilding the Zcash Machine: Tachyon and Quantum ReadinessZcash’s Tachyon upgrade aims to scale shielded payments, improve quantum readiness, and test whether its funding, security, and governance can hold.Jun 30, 2026Zcash’s Tachyon upgrade aims to scale shielded payments, improve quantum readiness, and test whether its funding, security, and governance can hold.Why it matters:Zcash’s Tachyon upgrade aims to scale shielded payments, improve quantum readiness, and test whether its funding, security, and governance can hold.View Full Report