Australia's ASIC Seeks to Extend Retail CFD Protections to Crypto-Settled Derivatives

ASIC wants to close a gap in leveraged trading rules

On Monday, the Australian Securities and Investments Commission (ASIC) proposed extending its rules for contracts for difference (CFDs) to include derivatives settled through digital asset transfers. CFDs are financial contracts that let traders bet on price movements without owning the underlying asset.

Currently, Australia's CFD rules apply to contracts settled in cash or by offsetting obligations between parties. ASIC wants to add contracts settled by transferring digital assets — including those that track non-crypto assets — as long as they meet the other criteria for a CFD. If the proposal is adopted, traders using crypto-settled CFDs would receive the same retail investor protections as those trading cash-settled CFDs.

Key elements of the proposed extension

• ASIC's existing CFD framework, introduced in 2021, includes leverage limits, mandatory margin close-outs, and negative balance protection.
• Negative balance protection caps a trader's losses at the funds already in their CFD trading account.
• Certain crypto futures and options with fixed expiration dates would remain outside the CFD rules.
• The proposal also extends to contracts that track non-crypto assets, provided they meet the other criteria for being classified as CFDs.

What ASIC clarified

ASIC stated that specific crypto futures and options with set expiration dates would not fall under the expanded CFD rules. The new protections would only apply if the contracts meet the other criteria for CFD classification.

Australia's broader crypto regulatory push

This proposal is part of a larger effort to tighten digital asset regulation in Australia. In April, the country passed legislation bringing crypto exchanges and tokenized custody platforms under its financial services licensing framework. That new regime takes effect on April 9, 2027.

ASIC also required crypto firms relying on temporary enforcement relief under existing financial services law to apply for licenses by September 30, or seek changes to their existing licenses.

Feedback period runs through early November

ASIC is seeking industry and stakeholder feedback on the proposed extension and amendments until November 9. The final shape of the rules will depend on the outcome of this consultation.

Sources

• Cointelegraph