A venue that runs one order book and takes users from across the European Union has one engineering answer and twenty seven legal ones. The question that splits them is narrow and comes first: is this contract a financial instrument? Everything downstream hangs on it. A yes puts the contract into the MiFID II world, with authorisation attached and, for a binary payoff, a retail prohibition. A no is what lets a tokenised contract fall to MiCA instead, because Article 2(4)(a) of Regulation (EU) 2023/1114 excludes crypto-assets that qualify as financial instruments from MiCA's scope. We have written before about the three rulebooks a tokenised event contract can land in. This piece is narrower and more awkward: the answer is not given once for Europe. It is given by each national authority under each national transposition, and the European Securities and Markets Authority has published the document that proves it.
ESMA put the problem in its own executive summary
The sentence is not buried. It opens the reasons for publication in the final report on the guidelines for qualifying crypto-assets as financial instruments that ESMA published in December 2024. The different approaches to national transposition of MiFID across Member States, the report says, mean that there is "no commonly adopted application of the definition of 'financial instrument' under MiFID in the EU". The report adds that this has been flagged as a concern since MiFID was first implemented, and that practical consequences may now emerge with MiCA, precisely over the classification of crypto-assets.
Paragraph 25 of the same report explains the mechanism without euphemism. MiFID II has no one size fits all definition; the concept is delineated through a list in Annex I Section C rather than through a set of conditions and criteria. The transposition mechanism, ESMA writes, does not allow practices and interpretations to be fully aligned at national level regarding the exact perimeter of the definition. Member States have not defined the term in a fully harmonised way. Some use a restrictive list of examples to define transferable securities, others use concept based definitions, and there might therefore be slight differences amongst national authorities about what constitutes a financial instrument.
That is a regulator describing, in its own document, the exact condition a firm selling one product into the whole single market has to price in. It is also why a classification memo whose jurisdiction field reads "EU" tells you nothing.
Two national texts, two different lists of what counts
The abstraction becomes concrete the moment you open two statutes. Take Ireland first. The European Union (Markets in Financial Instruments) Regulations 2017 define the term by cross reference and nothing else: financial instrument means any of the instruments specified in Part 3 of Schedule 1. Part 3 is eleven numbered items tracking Annex I Section C of the Directive, from transferable securities to emission allowances, with no national addition.
Now take Germany. Section 2(4) of the Wertpapierhandelsgesetz builds its own list of seven categories, and the seventh has no counterpart in the Directive's Annex I: Vermögensanlagen within the meaning of section 1(2) of the Vermögensanlagengesetz. Open that definition and it covers investments that are expressly not securitised, among them profit participating loans, subordinated loans and participation rights, plus a residual item for other investments that promise interest and repayment, or a cash settlement of monetary value, in exchange for the temporary transfer of money. German law also writes the securities limb as an open category, listing shares and debt titles as examples introduced by insbesondere, meaning in particular.
Neither text is wrong and neither is exotic. Both are the ordinary output of transposing a Directive. But a firm classifying the same yes or no contract reads a German list containing a category of non-securitised investments with its own residual limb, and an Irish list that does not. Those are two different exercises with two possible endings, and nobody has to act in bad faith for them to diverge.
The guidelines meant to close the gap are the comply or explain kind
ESMA did not leave the problem described and untouched. Under Article 2(5) of MiCA it was mandated to issue guidelines on the conditions and criteria for the qualification, and it did: the guidelines carrying reference ESMA75453128700-1323, dated 19 March 2025. Their scope section says they apply to competent authorities and to financial market participants alike, and that they apply 60 calendar days from publication in all official EU languages, which put them into effect on 18 May 2025.
Two features of that instrument matter more than its content. First, its legal weight. Guidelines are issued under Article 16(1) of the ESMA Regulation, Regulation (EU) No 1095/2010, and under Article 16(3) authorities and market participants must make every effort to comply. Every effort is not the same as compliance, and the same article requires an authority that does not comply to say so and give reasons. Second, the guidelines refuse to do the work for anyone. Their purpose section states that the illustrative examples should not be interpreted as a definitive classification, nor substitute or affect the necessary case by case analysis. Architecture and text both push the decision back down to the national authority and the firm.
The stakeholder group attached to ESMA said out loud what that leaves unsolved. In the advice reproduced in the final report, the Securities and Markets Stakeholder Group notes that because the concept sits in a Directive there are different national approaches to what qualifies, argues that the framework should progress to a common definition either by putting it in a Regulation or by giving ESMA wider powers to determine whether an asset qualifies, and acknowledges this is beyond ESMA's powers today. The body closest to the regulator describes the fix as legislative, not supervisory.
Five of the twenty seven gave the column something other than yes
Then there is the document almost nobody reads, and it is the most useful one in this whole file. ESMA publishes a compliance table for each set of guidelines. The one for the instrument test, reference ESMA75-113276571-1626 and dated 17 July 2026, lists all twenty seven Member States plus Iceland, Liechtenstein and Norway, with a column that reads yes or does not. Twenty two Member State rows read yes. Five do not, and their stated reasons are the substance of this article.
The Czech Republic is marked not applicable. The Czech National Bank states it intends to comply once the legal definition of securities under Czech law has been amended, or a corresponding change in judicial interpretation occurs, particularly for tokenised securities and tokenised units of collective investment undertakings governed by domestic law. It names the obstacle: application of paragraphs 11 to 32 and 37 to 43 of the guidelines is prevented by legislative barriers, specifically the formal concept of securities in Sections 514 and following of the Civil Code. An amendment remains a matter of expert discussion, with no formal proposal and no defined timeline. It complies with the remaining parts.
Slovakia is also marked not applicable, for a similar reason stated even more plainly. The National Bank of Slovakia explains that because Slovak securities legislation does not enable the issuance of tokenised transferable securities, authorities and market participants cannot classify any crypto-asset issued under that legislation as a transferable security. Legislative change is envisaged, again with no proposal and no timeline.
Latvia reads intends to comply, pending completion of the necessary legislative or regulatory proceedings. The table's own footnote sharpens what that means: if an authority continues to intend to comply after the application date it will be considered non-compliant, unless the guidelines concern instruments that do not exist in the jurisdiction, or legislative proceedings have been initiated.
Poland and Romania have no entry in the column at all. Against each the table records non-compliance by default, pending designation by the Member State of the competent authority for the jurisdiction. Read that twice. In a document dated 17 July 2026, two Member States are listed as having no designated authority for this purpose. For a venue asking who decides whether its contract is a financial instrument in Warsaw or Bucharest, there is no addressee named in the table.
Denmark wrote the operative sentence into the table itself
The most useful line for anyone building a European classification file is not in the guidelines. It is in the Danish row of the compliance table. The Danish Financial Supervisory Authority records that it already applies the ESMA guidelines, and then adds that it will consider foreign classifications as a relevant input but will always perform its own independent legal assessment based on EU law, including MiFID II, MiCA and the relevant ESMA guidelines.
That is a national authority stating, in a document ESMA publishes, that another regulator's conclusion about the same product is evidence rather than an answer. It settles a question many venues would rather leave open. A classification obtained in one Member State does not travel. It can be submitted and it will be read. It will not be adopted.
The same guidelines arrived as a circular, a gazette notice and a committee act
The compliance table also records how each authority put the guidelines into its own system, and the vehicles are not interchangeable. Bulgaria's Financial Supervision Commission reports implementation through national legislation. Croatia's HANFA issued a notice to supervised entities. Luxembourg's CSSF complied through Circular CSSF 25/886. Slovenia's Securities Market Agency adopted a decision published in Official Gazette No. 37/2025 on 23 May 2025, in force from 7 June 2025. Spain's CNMV folded the guidelines into supervisory procedure P04, its procedure for registering issues, public offers and listings. Ireland's Central Bank says the requirements will be incorporated into its supervisory processes and practices. In Greece the Bank of Greece adopted Executive Committee Act 256/2/16.06.2026.
Greece is worth a second look for another reason. It appears with two competent authorities, the Hellenic Capital Market Commission and the Bank of Greece, and Italy likewise lists both CONSOB and Banca d'Italia. The number of authorities that can give you an answer is therefore larger than the number of Member States. Twenty seven is the floor, not the count.
The word prediction appears nowhere in the document that decides this
One more thing about the final report is worth stating because it is countable. Search its full text and the words prediction, event contract, binary option and bet do not appear at all. Perpetual futures do, six times, and they get a dedicated paragraph inside Guideline 5 telling authorities and participants that perpetual futures should be treated as derivative contracts because they involve an agreement to exchange the performance of an underlying over time, and that tokenised perpetual futures must be assessed against Annex I Section C points 4 to 10. The neighbouring product category got a paragraph. Ours got nothing.
That silence has a practical edge, because Guideline 5 is the limb an event contract would be classified under, and it is written around an underlying. It asks whether holder rights are contingent on a contract based on a future commitment, whether the value is derived from an underlying asset, and whether settlement modalities match Annex I Section C points 4 to 10. It then tells authorities to ascertain that the crypto-asset has an underlying reference point such as rates, indexes or instruments relevant under those points, and says that a crypto-asset which does not derive its value from specified underlying assets as defined in MiFID II, but exists as a standalone crypto-asset, should be distinguished from a derivative contract. A footnote lists candidate underlyings, among them climatic variables, freight rates, inflation rates and other official economic statistics.
Apply that honestly to a single order book and the book splits before any border does. A contract on an inflation print points at something that footnote names. A contract on which party forms a government points at nothing on the list. ESMA's own public statement ESMA35-243228190-8148 of 3 July 2026 reaches the same place from the other direction, saying that not every event contract is a financial instrument and that those which are, are the ones whose question is tied to an underlying in Annex I Section C points 4 to 10. The firm therefore faces two cuts: contract by contract against the underlying list, then jurisdiction by jurisdiction against the national text.
What a yes costs and what a no costs
Neither answer is a soft landing, which is why the analysis has to be real. A yes makes the contract a derivative, and binary derivatives sit inside the permanent national product intervention measures that mirror ESMA Decision (EU) 2018/795, which prohibit the marketing, distribution and sale of binary options to retail clients. The German general administrative act under Article 42 of MiFIR shows the shape of a national measure in full, and its prohibition runs to retail clients within the meaning of Article 4(1)(11) of MiFID II. A yes also brings authorisation, which does not care about client category, as we set out in the piece on why going professional only does not remove the MiFID licence. A no is not freedom either; it routes the tokenised contract into MiCA's obligations.
What a venue cannot do is hold both answers at once and pick later. The classification drives the licence, the client gate, the marketing rules and the disclosure set. Deferring it is a decision to operate without knowing which of those applies.
The classification register we would publish before anyone asks for it
The standard that follows from this is unglamorous and cheap, and it is the kind of thing our directives are about. Keep a classification register at the level the law actually works at: one row per contract type and per Member State, not per region. Each row naming the instrument category considered and the national provision read, the authority whose view governs, the date of assessment and the person who signed it. Rows for Poland and Romania saying openly that no competent authority was designated as of the table's date, rather than a blank. Rows for the Czech Republic and Slovakia recording which parts of the guidelines those authorities told ESMA they cannot apply. And a review trigger tied to the compliance table being reissued, because it is reissued, and the row that changes will not be announced to you.
That register costs a venue very little and tells a regulator in one page that the question was taken seriously. Refusing to build it does not avoid the question; it means the answer arrives from outside, written by someone whose job is not to keep this category alive. We are in favour of these markets, and that is exactly why the honest version of a European classification has twenty seven rows and admits that several are unsettled. A single line reading Europe, not a financial instrument, is not a conclusion. It is the trace of an analysis nobody performed.