Answer · confidence: partial
What did regulators find about everyday people losing money on borrowed-money crypto bets?
Research question: What have regulators found about losses from leveraged crypto products sold to ordinary customers?
The records show that regulators have found heavy losses on leveraged products sold to retail clients, but the figures mostly cover CFDs in general rather than crypto alone. The CNMV found that between 70% and 90% of retail CFD investors lose money, depending on the firm 1, and the aggregate loss of retail CFD clients at the eight main firms reached 70 million euros 4. For crypto specifically, regulators say CFDs on cryptocurrencies pose major risks because the asset class is immature 16, and that consumers face the very real possibility of losing all their invested money if they buy crypto-assets 11. None of the verified facts gives a loss rate for leveraged crypto products alone, and the newest fact is from 12 July 2023, about three years before October 2026 1.
Checked 2026-10-21. Only documented and supported facts are used.
Dig deeper on this questionSources
[1] documented
The CNMV found that between 70% and 90% of retail CFD investors lose money, depending on the firm.
"los cuales en un alto porcentaje (entre el 70% y el 90% dependiendo de las entidades) sufren pérdidas."Para más información: Dirección de Comunicación CNMV
[2] documented
The CNMV found that retail clients of the eight main CFD firms lose money in most cases, with average losses of between -1,649 and -7,269 euros per client in a short period.
"los clientes pierden de manera muy mayoritaria, obteniendo unas pérdidas en un corto espacio de tiempo que en promedio varían entre -1.649 y -7.269 euros por cliente."Consulta pública sobre medidas adicionales de ...
[3] documented
The CNMV concluded that earlier measures from ESMA (2018) and the CNMV (2019) were not effective, because aggressive sales practices and mass advertising on the internet and social media undermined the restrictions.
"las prácticas comerciales agresivas y una publicidad masiva sobre estos productos a través de internet y redes sociales, han restado efectividad a las restricciones."Para más información: Dirección de Comunicación CNMV
[4] documented
The aggregate loss of retail CFD clients at these eight firms amounted to 70 million euros.
"ascendiendo la pérdida agregada a 70 millones de euros en 2021."Consulta pública sobre medidas adicionales de ...
[5] supported
Because of the high risk, the measures also apply to Spanish-authorised firms serving other EU states when the underlying is a crypto-asset that is not a financial instrument under MiFID.
"si el instrumento subyacente es un criptoactivo no considerado instrumento financiero con arreglo a la Directiva 2014/65/UE del Parlamento Europeo y del Consejo (MiFID), las medidas también se aplican a las empresas autorizadas en España cuando presten servicios en otros Estados miembros."Para más información: Dirección de Comunicación CNMV
[6] documented
The share of retail clients losing money on CFDs in Spain is above 70% for most of the most active firms, and in some cases approaches 90%.
"superior al 70% para la gran mayoría de las entidades con mayor actividad, y que en algún caso se acerca al 90%."Consulta pública sobre medidas adicionales de ...
[7] supported
For leveraged futures and options sold to retail investors, the CNMV limits maximum leverage and requires providers to close positions when they fall to 50% of the initial margin, which limits losses.
"se obliga al proveedor al cierre de posiciones cuando la posición descienda del 50% de la garantía inicial, lo que limita las pérdidas"Para más información: Dirección de Comunicación CNMV
[8] supported
Despite CFD restrictions adopted in 2018, the CNMV considers that retail investors remain inadequately protected, and the share of retail clients losing money on this product remains around 75%.
"a pesar de las medidas restrictivas de la operativa en CFD adoptadas en 2018, persiste una falta de protección de los inversores minoristas por la comercialización de estos productos de elevado riesgo. El porcentaje de clientes minoristas que pierde en sus inversiones con este producto continúa siendo muy elevado (en torno a un 75%)."Consulta pública sobre medidas adicionales de ...
[9] supported
Retail clients trading futures on regulated markets showed a similar loss rate of about 75%, the same as CFD traders.
"futuros negociados en mercados regulados se situaba en un rango similar (75%) al de los clientes que operaban en CFD."Consulta pública sobre medidas adicionales de ...
[10] documented
EU financial regulators warn that many crypto-assets are highly risky and speculative, making them unsuitable for most retail consumers.
"The European Supervisory Authorities (EBA, ESMA and EIOPA – the ESAs) today warn consumers that many crypto-assets are highly risky and speculative. ... In their warning, the ESAs highlight that these assets are not suited for most retail consumers as an investment or as a means of payment or exchange"EU financial regulators warn consumers on the risks of crypto-assets
[11] documented
Regulators state that consumers face the very real possibility of losing all their invested money if they buy crypto-assets.
"face the very real possibility of losing all their invested money if they buy these assets;"EU financial regulators warn consumers on the risks of crypto-assets
[12] documented
Crypto-assets and related products typically fall outside existing protection under current EU financial services rules, leaving consumers with a lack of recourse.
"The ESAs also warn consumers that they should be aware of the lack of recourse or protection available to them, as crypto-assets and related products and services typically fall outside existing protection under current EU financial services rules."EU financial regulators warn consumers on the risks of crypto-assets
[13] documented
Regulators advise consumers to be wary of promised fast or high returns, especially those that look too good to be true.
"should be particularly wary of promised fast or high returns, especially those that look too good to be true."EU financial regulators warn consumers on the risks of crypto-assets
[14] documented
The average loss per retail investor in CFD trading ranges from €1,600 to €29,000.
"with average losses per investor ranging from €1,600 to €29,000."Additional information on the agreed product intervention ...
[15] documented
ESMA and NCAs have significant concerns about the integrity of price formation in cryptocurrency markets, making it difficult for retail clients to value these products.
"ESMA and NCAs have significant concerns about the integrity of the price formation process in underlying cryptocurrency markets, which makes it inherently difficult for retail clients to value these products."Additional information on the agreed product intervention ...
[16] documented
CFDs on cryptocurrencies are considered to pose major risks for investors due to the immature nature of the asset class.
"Cryptocurrencies are a relatively immature asset class that pose major risks for investors."Additional information on the agreed product intervention ...
[17] documented
ESMA and other regulators have repeatedly warned of the risks involved with investing in cryptocurrencies.
"ESMA and other regulators have repeatedly warned 3 of the risks involved with investing in cryptocurrencies."Additional information on the agreed product intervention ...
[18] documented
Regulators found that the detriment to retail investors caused by CFDs and binary options persists across the European Union despite previous warnings and national measures.
"However, the detriment to retail investor caused by these products across the European Union still persists and therefore it is necessary for ESMA to exercise its new power."FREQUENTLY ASKED QUESTIONS
[19] documented
ESMA and national competent authorities have been increasingly concerned about the rapid increase in the marketing and sale of CFDs and binary options to retail investors.
"In recent years, ESMA and national competent authorities (NCAs) have been increasingly concerned about the rapid increase in the marketing, distribution or sale of these products to retail investors across the European Union."FREQUENTLY ASKED QUESTIONS
[20] documented
Regulators determined that the risks to investor protection posed by these products are not sufficiently controlled or reduced, leading to the implementation of product intervention measures.
"Despite these actions, significant concerns remain that the risks to investor protection posed by these products is not sufficiently controlled or reduced."FREQUENTLY ASKED QUESTIONS
[21] documented
ESMA identified that leverage in CFDs magnifies risk, particularly when the underlying asset is volatile, which can lead to large losses being crystallized from small price movements.
"the risk that even small price movements in the underlying drive large changes in the investor’s available margin, making it likely that large losses will be crystallized."FREQUENTLY ASKED QUESTIONS
[22] documented
Regulators found that charges such as financing costs or transaction fees applied to total initial exposure can instantly deplete much or all of the investor's margin.
"the risk that charges (such as financing costs or transaction fees) applied to the total initial exposure instantly deplete much or all of the margin"FREQUENTLY ASKED QUESTIONS
[23] documented
Retail investors trading leveraged derivatives with individual stocks as the underlying asset experience negative raw returns.
"We find that raw returns are negative for derivatives with stock as underlying, and only partially positive for those with index as underlying."(Un)skilled Leveraged Trading of Retail Investors (2013)
[24] documented
The risk-adjusted performance of retail investors in these leveraged products is poor, with Sharpe ratios below one.
"Nevertheless, risk-adjusted returns show a poor performance with sharpe ratios below one."(Un)skilled Leveraged Trading of Retail Investors (2013)
[25] supported
ESMA's justification said CFD sales to the retail mass market were growing steadily even though the products are complex and unsuitable for the large majority of retail investors.
"dass der Vertrieb von CFD auf dem Kleinanleger-Massenmarkt stetig zunimmt, obwohl diese Produkte komplex und für die große Mehrheit der Kleinanleger ungeeignet sind"Verfügungen - Allgemeinverfügung bezüglich sog. Differenzgeschäfte ("Contracts for Difference / CFD") - Bafin