Australia’s securities regulator has proposed bringing certain crypto settled derivatives under existing retail trading safeguards after reporting more than $458 million in losses among contracts for difference traders.
Summary
- Australia’s securities regulator has proposed bringing certain crypto settled derivatives under existing CFD rules, including leverage limits and retail investor safeguards.
- ASIC is seeking a 10 year renewal of its CFD protections after 68% of retail traders recorded net losses totaling more than $458 million in 2023–24.
- The proposed changes would clarify margin requirements, restrict netting of opposing positions and cover qualifying contracts settled through digital asset transfers.
- The regulator is accepting feedback until Nov. 9, while Australia’s separate crypto licensing framework is scheduled to take effect in April 2027.
The Australian Securities and Investments Commission (ASIC) said on Monday that it wants to update the definition of contracts for difference, or CFDs, to cover eligible products settled through digital asset transfers, while keeping existing restrictions on leverage and investor losses.
ASIC has proposed keeping its CFD product intervention order in place for another 10 years, subject to ministerial approval. The current order took effect on March 29, 2021, and is scheduled to expire on May 23, 2027.
The regulator has invited public feedback on the proposed changes until Nov. 9.
ASIC wants crypto settled CFDs covered by existing safeguards
CFDs allow investors to speculate on changes in the value of an asset without owning it. Traders can take positions on cryptocurrencies, stocks, commodities and other financial instruments, often using borrowed funds to control positions larger than their initial deposits.
Australia’s existing CFD rules generally cover contracts settled in cash or through the offsetting of obligations between counterparties.
Under ASIC’s proposal, the definition would include qualifying contracts settled through transfers of digital assets, even when the underlying exposure relates to an asset outside the cryptocurrency market.
The regulator said products with comparable economic characteristics and risks should receive consistent regulatory treatment regardless of how settlement takes place.
Not every crypto derivative would fall within the proposed changes. Certain cryptocurrency futures and options with fixed expiration dates would remain outside the CFD product intervention order.
Existing safeguards limit the amount of leverage available to retail clients and require providers to close positions when account funds fall below prescribed levels.
Negative balance protection prevents clients from losing more than the funds in their CFD trading accounts. Providers are subject to restrictions on incentives offered to attract retail traders.
ASIC’s proposed amendments would retain those protections while clarifying how initial margin requirements apply to CFDs linked to options.
The regulator wants each CFD position to meet its margin requirement separately, preventing providers from reducing the required margin by netting opposing positions.
Other changes would clarify restrictions on inducements, including discounts and educational or research tools offered to clients. Providers would have to maintain records of permitted discount offers.
ASIC has proposed replacing references to “cryptoasset” with “digital asset” throughout the order.
Retail CFD traders lost more than $458 million in one year
ASIC’s proposed 10-year renewal follows its assessment of retail trading outcomes under the existing restrictions.
During Australia’s 2023–24 financial year, 68% of retail clients trading CFDs recorded a net loss, according to the regulator.
Combined net losses exceeded $458 million, including $73 million in fees. Among retail clients trading CFDs over options, 85% lost money.
ASIC acknowledged that its intervention order had reduced harm since its introduction but said losses remained substantial.
The regulator considers the existing protections effective and necessary, citing the continuing risks associated with leveraged CFD trading.
Its proposed 10-year renewal would provide regulatory certainty without requiring frequent extensions. ASIC would retain the ability to revoke the order before the end of that period where appropriate.
Australia prepares separate licensing rules for crypto firms
Australia has been making changes to how cryptocurrency businesses operate under its financial services laws, with separate requirements covering exchanges, custody platforms and investment products.
On Sept. 30, ASIC’s temporary licensing relief expired for certain digital asset businesses required to obtain authorization under existing legislation.
As crypto.news previously reported, companies relying on that relief had to apply for an Australian Financial Services license or seek changes to an existing license before the deadline.
Businesses requiring market or clearing and settlement licenses faced separate notification and preliminary meeting requirements.
ASIC had recorded more than 45 digital asset licensing applications following updates to its regulatory guidance in October 2025.
Firms operating without required authorization and outside the conditions of the temporary relief could face civil or criminal penalties from Oct. 1. Potential fines under applicable financial services laws can reach 10% of annual turnover.
The regulator’s authority over cryptocurrency products was examined by Australia’s High Court in June, when judges ruled against Block Earner in a dispute concerning its former fixed yield investment product.
The unanimous decision found that the product qualified as both a financial investment facility and a derivative under existing legislation, meaning the company needed a financial services license.
The case was returned to the Full Federal Court to consider ASIC’s appeal concerning penalties.
ASIC has previously pursued enforcement action involving cryptocurrency derivatives providers. In March, Australia’s Federal Court ordered Binance Australia Derivatives to pay an A$10 million civil penalty after 524 retail clients were incorrectly classified as wholesale investors.
The company had paid A$13.1 million in compensation before the penalty was imposed.
Separately, Australia’s Corporations Amendment (Digital Assets Framework) Act 2026 passed Parliament on April 1 and received Royal Assent on April 8.
Scheduled to take effect on April 9, 2027, the legislation will bring digital asset platforms and tokenized custody platforms into a dedicated financial services licensing framework.
ASIC will oversee licensing and supervision under the new regime, including requirements covering custody, transactions, settlement and financial resources.
Some businesses already licensed under existing financial services rules may need to update their authorizations when the new framework takes effect.