Retail traders using digital assets to settle leveraged contracts would gain the same safeguards as cash-settled traders under ASIC’s proposed changes to crypto CFD regulation in Australia. The Australian Securities and Investments Commission put forward the changes on October 12, alongside a request to extend protections after retail CFD losses exceeded $458 million in the 2023–24 financial year.
Key takeaways
- ASIC wants qualifying digital asset-settled CFDs covered by existing retail safeguards.
- Retail CFD losses included $73 million in fees in 2023–24.
- Certain fixed-expiry crypto futures and options would stay outside the order.
- Public feedback closes on November 9.
According to crypto.news, the proposal would broaden the definition of contracts for difference while preserving leverage restrictions and loss protections. Cointelegraph also reported that qualifying contracts tracking non-crypto assets would be covered when settled through digital asset transfers.
How Australia’s crypto CFD regulation would change
ASIC would extend the existing CFD definition to eligible contracts settled through digital asset transfers. Current rules generally cover cash settlement or the offsetting of obligations between counterparties.
CFDs let traders speculate on an asset’s price without owning it, often using borrowed funds to take positions larger than their deposits. ASIC’s position is that products with similar economic features and risks should receive consistent treatment, regardless of their settlement method.
The proposal would retain leverage limits, mandatory position closures when account funds fall below prescribed levels, and negative balance protection. This feature stops a client’s CFD trading account from losing more money than it contains. The intervention order would not apply to specific cryptocurrency futures and options that have set expiry dates.
Each position would have to satisfy its own margin requirement. Providers would not be allowed to lower required margin by netting opposing positions, and the amendments would clarify initial margin requirements for CFDs linked to options.
ASIC also proposes clearer restrictions on inducements, including discounts and educational or research tools, with providers required to maintain records of permitted discount offers. References to “cryptoasset” would become “digital asset” throughout the order.
Retail losses underpin the proposed 10-year extension
ASIC wants another 10 years of CFD protections after its assessment found that 68% of retail clients lost money during Australia’s 2023–24 financial year. Their combined net losses exceeded $458 million, including $73 million in fees.
Among retail clients trading CFDs over options, 85% lost money. ASIC said the intervention had reduced harm but that substantial losses persisted, and it considers the safeguards effective and necessary given the risks of leveraged trading.
The existing order began on March 29, 2021, and expires on May 23, 2027. ASIC said a longer renewal would provide regulatory certainty without frequent extensions.
Consultation closes on November 9
ASIC is accepting public comments on the extension and amendments until November 9. The proposed renewal is subject to ministerial approval.
The regulator would retain authority to revoke the intervention order before the proposed 10-year period ends where appropriate.
A separate licensing framework starts in April 2027
Australia’s dedicated digital asset licensing regime is scheduled to begin on April 9, 2027, separately from the proposed crypto CFD regulation changes. It will cover digital asset platforms and tokenized custody platforms, with ASIC overseeing licensing, custody, transactions, settlement and financial resources.
Parliament passed the Corporations Amendment (Digital Assets Framework) Act 2026 on April 1, with Royal Assent following on April 8. Businesses holding licenses under current financial services rules might need to revise their authorizations as a result.
Temporary licensing relief expired on September 30. Companies depending on it were required either to obtain an Australian Financial Services license or request changes to an existing one, while market and clearing-and-settlement licensing came with its own separate notification and preliminary meeting obligations. ASIC recorded more than 45 digital asset licensing applications following its October 2025 guidance updates.
From October 1, unauthorized firms outside the relief conditions faced potential civil or criminal penalties, with applicable fines reaching 10% of annual turnover.
Earlier enforcement included a June High Court ruling that Block Earner’s former fixed-yield product required a financial services license; the penalties appeal returned to the Full Federal Court. In March, Binance Australia Derivatives received an A$10 million civil penalty after 524 retail clients were misclassified as wholesale investors. It had already paid A$13.1 million in compensation.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.