Australia Moves to Extend CFD Retail Protections to Crypto-Settled Derivatives
Key Takeaways
- •ASIC has proposed expanding its CFD product intervention rules to cover leveraged trading contracts settled through the transfer of digital assets.
- •Crypto-settled CFDs currently fall outside Australia's leverage caps and account safeguards because the existing framework was built around cash settlement.
- •If adopted, traders using crypto-settled CFDs would receive the same protections as those trading cash-settled contracts, while certain crypto futures and options with fixed expiration dates would remain outside the framework.
- •ASIC is accepting industry and stakeholder feedback on the consultation paper until Nov. 9, with changes to the intervention order to follow its review of submissions.
- •The proposal comes as Australia strengthens broader digital asset regulation, including April legislation that brings crypto exchanges and tokenized custody platforms under a licensing regime effective April 9, 2027.
Australia's securities regulator is seeking to extend leverage limits and other retail investor safeguards to certain trading contracts settled in cryptocurrency.
On Monday, the Australian Securities and Investments Commission (ASIC), the country's corporate and markets regulator, proposed expanding the rules for contracts for difference (CFDs) — leveraged derivatives that let traders speculate on price movements without owning the underlying asset. The rules generally cover contracts settled in cash or by offsetting obligations between the parties.
Under the proposal, ASIC wants to bring contracts settled through the transfer of digital assets within the framework, including contracts that track non-crypto assets, provided they meet the other criteria for a CFD. If adopted, Australian traders using crypto-settled CFDs would receive the same protections as those trading cash-settled contracts. Because the existing framework is built around cash settlement, crypto-settled offerings currently sit outside those leverage caps and account safeguards — the gap the proposal is designed to close. Certain crypto futures and options with fixed expiration dates would remain outside the framework, the regulator said.
The proposal is set out in a consultation paper, on which ASIC is seeking industry and stakeholder feedback until Nov. 9; any changes to the intervention order would follow the regulator's review of those submissions.
Australia's existing CFD framework, introduced in 2021 through a product intervention order, caps leverage, requires providers to close positions when account funds fall below specified levels, and limits losses through negative balance protection to the funds held in a client's CFD trading account.
The move comes as Australia strengthens its broader digital asset regulation. In April, the country passed legislation bringing crypto exchanges and tokenized custody platforms under its financial services licensing framework, with the new regime taking effect on April 9, 2027. ASIC has also required crypto firms relying on temporary enforcement relief under existing financial services law to apply for licenses by Sept. 30 or seek changes to their existing licenses.
Related: Australia says it removed 45 crypto, remittance registrations over the past year
