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Why are future contracts on Binance prohibited in France?
Since the summer of 2022, French users can no longer access future on Binance . These perpetual term contracts make it possible to bet on the increase ( long ) or the drop ( shorts ) of a cryptocurrency without having to hold it directly. Unlike conventional term contracts, they have no maturity date and operate with a financing mechanism (Funding Rate).
Not having the underlying asset means that the investor never really has the cryptocurrency concerned. It simply exchanges a contract which follows its price, which avoids the management of deposits and withdrawals of assets. In return, this implies paying financing rates : these costs are paid between traders depending on whether the buying (long) or saleswoman position (shorts) is in the majority, in order to align the price of the perpetual contract with that of the Spot market.
The prohibition of future in France is based on regulatory constraints and high risks linked to the leverage . To continue using these products, many traders turn to decentralized such as Drift , dYdX and Hyperliquid , accessible via a Crypto Wallet without central intermediaries.
Table of contents
Reasons for the ban on future Binance in France
French regulatory framework and its impact on Binance 's future
French regulations impose specific requirements for the marketing of derivative products , in particular with regard to the protection of investors.
In the case of Binance, although the platform has been recorded as a PSAN since May 2022, this recording does not legally make it possible to offer high leverage derivatives, which, in some cases, can reach 100x and expose investors to significant market fluctuations. It requires strict conditions to ensure that complex products are offered in a framework suitable for user knowledge and regulatory requirements.
The AMF therefore considers that access to this kind of product is not suitable for individuals. Is it his responsibility to determine this? Everyone will make their opinion on the question.
In the crosshairs of regulators: Binance Futures prohibited in France
In addition, Binance was the subject of investigations for potentially irregular practices in various countries, including in France. These investigations have strengthened the vigilance of regulators as to the marketing of sophisticated financial products. Although these investigations do not call into question all Binance , they encourage authorities to further supervise the supply of derivative products, in order to prevent particularly complex financial instruments from being offered without the guarantees that the AMF considers appropriate for the general public.
Currently, no centralized exchange approved in France legally proposes the trading of perpetual contracts.
Nature of perpetual contracts and tax issues for future Binance in France
The future of Binance were perpetual contracts , that is to say that they have no due date , unlike conventional term contracts , which expire on a specific date (for example, a future on wheat requiring a delivery or a financial settlement) . The perpetual nature of these contracts creates a legal gray area :
- Should they be considered as conventional term contracts and therefore follow the tax regime for digital assets?
- Or like complex financial products , requiring more strict supervision?
AMF imposes a strict distinction between conventional digital assets and leverage derivatives , and perpetual contracts do not enter any clear category. This uncertainty complicates their legal recognition and their tax treatment.
In addition, the financing mechanisms (Funding Rate) , which adjust the contract price compared to the SPOT market, can generate financial flows even without a position fence . This adds an intermediate tax factor which could, according to the tax administration, be taken into account independently of the closure of the contract.
Faced with these endless regulatory and tax constraints, and in the absence of a clear framework, Binance preferred to suspend its perpetual contracts in France rather than risking a sanction from the authorities.
Binance Futures prohibited in France: main risks linked to the trading of future contracts in cryptocurrencies
Leverage and volatility
Cryptocurrencies are known for their very volatility . When you coupled this volatility with a lever effect , even moderate (for example X10), your potential gains may seem very attractive, but your potential losses can be just as brutal. It is not uncommon to see positions liquidated in a few minutes during sudden fluctuations on the market.
According to several studies, notably those carried out by various crypto analysis firms in 2021, the majority of traders lose their funds when they venture on derivatives with leverage without prior training. The AMF , in its official communications, regularly insists on the dangers of these products, recalling that they are mainly intended for an informed audience.
Binance Futures prohibited in France: suspicions of illegal practices
Another factor having contributed to the ban on Binance in France lies in suspicions of money laundering and illegal practices surrounding the Binance . Regulators fear that these high volatility financial instruments can be used to hide fraudulent transactions. If Binance has always proclaimed its desire to cooperate with the authorities and to clean up its image, the current surveys have prompted the platform to strengthen its compliance procedures ( KYC , fight against money laundering, etc.).
In this context, the cessation of perpetual contracts could be perceived as a means of reassuring the authorities and avoiding more severe sanctions. The surveys have not yet resulted in a clear outcome, and Binance actively affirms to actively work on the establishment of regulatory safeguards capable of convincing the AMF and the other European regulators.
Binance Futures prohibited in France: What are the impacts for French traders?
Decrease in the supply of derivative products
The main impact for traders residing in France is the loss of a appreciated tool to speculate upwards or downwards. Perpetual contracts make it possible to bet on a lower (short position) or upward (long position) trend with a significant lever effect The end of this offer forces many speculators to review their strategies or migrate to other platforms.
Multiplication of tax issues
On the tax side, the situation is not simpler. Gains and losses linked to arbitration and derivative trading are not strictly in the same tax category as the simple sale of digital assets (subject to “flat tax” of 30 % in France, under certain conditions) . As future can be considered as financial instruments , there may be ambiguity regarding the applicable tax regime. The Directorate General of Public Finances (DGFIP) has repeatedly recalled the importance of inquiring with professionals in the event of doubt about the nature of these gains.
Search for alternatives
Faced with the impossibility of using Binance Futures in France, many traders are now turning to platforms or which are not subject to the same regulations. Before taking the plunge, it is crucial to understand precisely the risks involved, the reliability of the platform and the way in which the decentralized wallet
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Binance Futures prohibited in France: the best alternatives to trader perpetual contracts
Decentralized platforms of perpetual contracts: Drift, dYdX and Hyperliquid
Drift , dYdX and Hyperliquid platforms allow you to trader perpetual contracts without going through a centralized platform like Binance . They operate thanks to smart contract S (autonomous programs on blockchain) which automatically manage orders, leverage and liquidity, without intermediary.
How do smart contractwork in perpetual trading?
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Opening and management of positions
- A trader can open a long (bet on the rise) or shorts (bet on the drop).
- His order is recorded on the blockchain by a smart contract which ensures the smooth running of the trade.
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Lever and margin effect
- These platforms make it possible to trader with a lever effect (example: 10x means that you bet 10 times more than your capital).
- A smart contract permanently checks if the trader has enough funds to cover his losses.
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Automatic liquidation
- If the market evolves against the trader, and its balance becomes insufficient, the smart contract automatically firm its position to avoid excessive losses.
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Funding rate (Funding Rate)
- As these contracts have no deadline , a funding rate is applied to maintain their price close to the real market (SPOT market).
- long traders pay traders shorts (or vice versa), depending on supply and demand.
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Liquidity management
- Unlike centralized platforms , these platforms use liquidity pools (cryptos reserves provided by other users) to execute orders.
- Some also use a decentralized order book like dYdX , to better control the price of transactions.
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Safety and transparency
- All transactions are recorded on the blockchain, which avoids manipulation and makes it possible to check all the actions in real time.
- The user remains master of his funds since he uses his own portfolio (Wallet) and not that of a platform.
Why are these platforms an alternative to Binance Futures?
They offer the same features (lever effect, shorts, fluid trading), but without central intermediary. Thanks to the DeFi (decentralized finance), they guarantee more transparency , control over its funds , and less risks linked to a platform that could block withdrawals or manipulate the market.
For a trader looking for an alternative to future Binance , these decentralized platforms are today the best option available.
Drift : Trading experience on Solana
How does Drift work?
Drift is an initially developed decentralized exchange Solana , a blockchain renowned for its speed and low transaction costs. The principle is quite simple: you connect your wallet , you drop the accepted cryptocurrency (often USDC USDC Solana Solana in a smart contract , and you can then take long or short positions on different pairs.
Drift advantages
- Reduced speed and fresh : Solana , with its potentially flow rate of several thousand transactions per second, makes the experience fluid, which is crucial for traders seeking to execute orders quickly.
- Intuitive interface : Compared to other more complex Dex, Drift is accessible and has dashboards reminiscent of large platforms .
- Risk management : liquidation and position monitoring tools are integrated, although the responsibility for piloting the lever effect returns to the user.
dYdX : the reference DEX for derivatives
How does dYdX work?
dYdX is often presented as a reference for trading of decentralized perpetual contracts . Initially launched on Ethereum , the protocol used a layer 2 to offer fast and low cost transactions. Since its transition to its own blockchain, dYdX Chain , based on the Cosmos , the protocol works in a even more decentralized way, with a model based on evidence (proof-of-stake) .
To start trading, simply connect a compatible wallet and supply your dYdX in USDC , the main stablecoin used on the platform. Users can then choose their lever , place long or short orders , and access a wide range of crypto pairs while benefiting from the advantages of decentralized finance ( DeFi ) .
dYdX advantages
- Solid reputation : for several years, dYdX has won the confidence of the Crypto community thanks to the reliability of its protocol and the absence of major incidents.
- Large choice of markets : even if the offer is more limited than centralized exchange, it remains more varied than on many decentralized competitors.
- Competitive costs : Thanks to its Layer 2 , dYdX pays the luxury of offering much cheaper transactions than a direct interaction on Ethereum Mainnet.
Hyperliquid: the new generation of Dex
How does hyperliquid work?
Hyperliquid presents itself as a trading taking advantage of smart contract to offer perpetual contracts on different pairs of cryptocurrencies. It aims to be a pioneer in optimizing on-chain liquidity, with an emphasis on performance and simplicity of use. To access Hyperliquid, we connect via a wallet , we deposit guarantees in stablecoin s, and we then open its positions.
Hyperliquid advantages
- Strong liquidity : The protocol emphasizes the aggregation of liquidity, improving the trading and reducing the Slippage .
- Clean interface : The team has focused on ergonomics, offering a minimalist dashboard recalling that of Binance .
- Technological innovation : Hyperliquid seeks to innovate in the management of positions by integrating more efficient liquidation algorithms, supposed to reduce “unjust” liquidations.
Conclusion: What alternatives after the ban on future Binance in France?
The prohibition of perpetual contracts on Binance in France regulatory and tax constraints to legally propose derivatives with leverage. The strict regulation of the AMF deprives French traders of access to centralized future .
Fortunately, alternatives exist thanks to decentralized exchanges such as Drift , dYdX and Hyperliquid . These platforms make it possible to trader perpetual contracts by remaining master of its funds, without going through a centralized intermediary. With transparent mechanisms based on smart contract , they offer a credible and robust alternative to CEX, while ensuring free and non -censurable access to the markets.
However, these solutions require a good understanding of risks , in particular linked to the leverage and automatic liquidations . Before you start, it is crucial to control the trading mechanisms on Perpetuals and to use suitable risk management strategies
The evolution of regulations in France and in Europe could redefine the legal framework of derivative products on crypto in the years to come. In the meantime, Dex specialized in perpetuals remain the best options for French traders seeking to speculate on the increase or the drop in the Crypto market without centralized restrictions .
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Yohan Uzzan
Training engineer, I quickly became interested in the field of finance. Convinced that decentralized finance has a bright future ahead of it, I participate in its democratization by developing Crypternon.
