A MiFID II-licensed crypto venue offering perpetual futures is now live in the European Union—transforming a failed exchange’s European unit into a compliant derivatives platform. It marks a regulatory first, and a potential test case for how MiCA will govern market abuse, transparency, and retail protections in crypto trading.
From Collapse to Compliance
Backpack’s launch of a regulated European unit comes less than two years after the collapse of FTX. When FTX EU was carved out during restructuring, its Cypriot license under the EU’s MiFID II framework became a rare prize: a gateway into Europe’s regulated securities markets.
Backpack acquired the entity earlier this year and has now relaunched it as a venue for perpetual futures—products often criticized for their risk profile but now offered inside a compliance-driven environment.
Perpetual futures dominate global crypto trading, accounting for more than 75% of daily derivatives activity worldwide. Until now, these instruments were effectively confined to offshore platforms in Asia or the Caribbean. With Backpack EU, they are being tested inside the European regulatory perimeter for the first time.
What MiFID II Brings to Crypto
Unlike offshore venues, Backpack EU must follow the same rules as traditional financial intermediaries. That includes leverage caps, where retail clients face limits far below the 50x or 100x multipliers often marketed abroad. Under MiFID II, crypto derivatives are treated similarly to contracts for difference (CFDs), with retail leverage typically capped between 2x and 5x.
“Cyprus has been clear: if these products are offered to European investors, they must meet MiFID II standards,” said a senior official at the Cyprus Securities and Exchange Commission (CySEC). “That means strict controls on leverage, transparent disclosures, and safeguards that prevent retail traders from being overexposed.”
Backpack EU must also comply with market abuse monitoring, order book transparency, and segregation of client assets. These safeguards align closely with MiCA’s goals, though derivatives remain under MiFID II.
MiCA vs. MiFID II: A Convergence Ahead
The launch highlights an unusual overlap in EU law. MiCA, phased in across 2024 and 2025, governs crypto spot markets, stablecoins, and service providers. Derivatives, however, remain firmly under MiFID II.
That means Backpack EU is effectively pioneering the regulatory convergence of MiFID II and MiCA—a template that could later define how other venues operate.
“MiCA brings clarity for spot markets, custody, and stablecoin issuance,” explained Sofia Dimitriou, a Brussels-based financial policy analyst. “But derivatives are outside its scope. For now, MiFID II is the rulebook. Backpack’s model shows how the two frameworks might eventually dovetail.”
For market participants, this dual regime creates both certainty and complexity: certainty that oversight exists, complexity in navigating two sets of requirements.
Institutional and Retail Read-Through
For institutions, the launch could be the catalyst they were waiting for. Asset managers and professional traders across Europe have avoided perpetual futures due to regulatory uncertainty. A MiFID II-licensed venue offers them a familiar compliance structure, potentially unlocking new flows of capital into Europe’s crypto markets.
“Finally we have a perps venue that passes our compliance checks,” said Marc Weber, head of trading at a mid-sized German asset manager. “It won’t replace our offshore accounts overnight, but it gives us an option we can actually present to auditors.”
For retail traders, the picture is more constrained. They gain access to perpetual futures without needing offshore accounts, but strict leverage caps will limit the speculative intensity that made perps so attractive elsewhere.
“The days of 100x leverage being marketed to European retail are over,” noted Weber. “But that doesn’t mean liquidity disappears—it means liquidity is better supervised.”
Adoption Challenge: Offshore vs. Regulated
A key question is whether Backpack EU can attract liquidity away from offshore giants like Binance, Bybit, and OKX, which dominate global perps volume. Liquidity in derivatives markets is self-reinforcing: traders follow the deepest books and tightest spreads.
Some believe Europe’s compliance-first model will struggle to compete on cost and volume. Others argue that institutional money—currently sitting on the sidelines—could create a parallel liquidity pool, particularly once MiCA goes live.
“Backpack EU may never rival Asia on retail volume, but it doesn’t need to,” said Dimitriou. “If it captures the institutional layer, it sets a precedent that compliance pays.”
From FTX’s Shadow to Europe’s Spotlight
The symbolism is striking: a unit once belonging to FTX, synonymous with reckless risk-taking, has been refashioned into a compliance-first exchange. Regulators will see it as a laboratory for responsible innovation, while traders will judge it on liquidity, costs, and spreads.
The outcome will determine whether Backpack EU becomes a niche product for institutions or a genuine rival to offshore markets. Either way, its regulatory architecture may serve as the foundation for how Europe handles crypto derivatives under MiCA and beyond.
The Bigger Picture
The debut of Backpack EU is more than a market launch—it is a regulatory milestone. It provides the first evidence that high-risk products like perpetual futures can exist within Europe’s financial rulebook.
Whether the venture thrives commercially or struggles against offshore competitors, its impact is already clear: regulators, institutions, and DeFi platforms will study Backpack EU’s framework as they prepare for MiCA’s full enforcement.
For Europe, it signals the beginning of a new chapter in crypto derivatives—one where innovation and oversight must coexist.
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