EU regulators warn: Some event-based prediction market contracts are banned from sale to retail investors.
2 hours ago
The European Securities and Markets Authority (ESMA) issued a statement saying that if "Event Contracts" for prediction markets meet the definition of financial instruments, they fall under the category of binary options, and under EU rules, their marketing, distribution, or sale to retail investors is prohibited. ESMA noted that the legal status of a product depends on its actual function, not commercial names like "Event Contracts". If the relevant contracts meet MiFID II’s definition of financial instruments, they will be classified as derivatives and subject to the EU’s binary options ban. ESMA also pointed out that even if a platform only offers such products to professional investors, it still needs to obtain MiFID II authorization if it provides related investment services within the EU. In addition, Event Contracts may also be subject to the gambling laws of individual EU member states; if the product is tokenized and not classified as a financial instrument, it may fall under the scope of the Markets in Crypto-Assets Regulation (MiCA).
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