Australia's securities regulator is proposing to bring certain derivatives settled in digital assets within its retail contracts-for-difference protections, addressing products that have CFD-like risks but may fall outside the current definition because of their settlement method.
The Australian Securities and Investments Commission opened the consultation on October 12. It also proposes extending the existing product intervention order for ten years. These are proposals, not new restrictions that have already taken effect.
The settlement asset would not decide the protection
ASIC's consultation says some derivatives with the economic characteristics of CFDs may currently escape the order when settlement involves transferring digital assets. Its proposed definition would address that distinction while retaining other qualifying characteristics. Certain fixed-expiry crypto options and futures would remain outside the order.
The underlying exposure and the settlement asset are different features of a contract. A product can reference one asset while paying gains or losses in another. Changing the payment medium does not, by itself, tell a customer whether the position is leveraged or how quickly its collateral can be consumed.
For example, imagine a hypothetical derivative that gives exposure to an asset worth $1,000 against $100 of initial margin. A $50 adverse move is 5% of the reference exposure but half the initial margin, before fees and any close-out rules. Paying that result in tokens rather than cash does not change that basic relationship.
The example illustrates leverage; it is not a quote from an actual product or a conclusion that every token-settled contract is a CFD. Legal scope depends on the contract's characteristics, not simply the currency shown on a trading interface.
Protections and boundaries
The current order covers leverage limits, margin close-out arrangements, negative balance protection and restrictions on certain inducements. ASIC also proposes clarifying separate initial-margin requirements for each CFD, rather than allowing opposing positions to reduce that calculation.
The regulator reports that 68% of retail CFD clients made a net loss in the 2023–24 financial year, with aggregate net losses exceeding A$458 million. Those are historical sector figures, not a measurement of today's crypto market or the losses of all cryptocurrency investors.
Trading costs also need to be separated from the settlement question. A position can incur financing charges even when its reference price returns to its starting point. Our funding-rate guide explains one crypto-derivative payment mechanism; it is not a claim that every CFD uses perpetual funding.
A consultation, with decisions still ahead
Responses close at 5 p.m. AEDT on November 9. Extending the order requires ministerial approval; its current expiry is May 23, 2027. ASIC is separately asking for evidence about whether some CFDs over options should remain available to retail clients, without announcing a decision to ban them.
For readers, the immediate development is a regulatory proposal focused on comparable risks across different settlement methods. It does not establish that all crypto derivatives will be covered, that all leverage will be prohibited or that the proposed changes are already enforceable. The next steps are consultation responses and the final decisions defining scope and timing.