Australia’s securities watchdog has outlined a plan to broaden its existing contracts-for-difference (CFD) framework so that contracts settled by the transfer of digital assets fall under the same regulatory net as cash-settled products. The move would bring a range of crypto-linked contracts, including those that mirror traditional assets, into the scope of current retail-investor protections, provided they satisfy the standard CFD criteria.
Leverage limits and safety mechanisms
The 2021 regime already imposes a ceiling on the amount of leverage that providers may extend to retail traders and obliges firms to close out positions when a client’s account equity slips below preset thresholds. In addition, the rules enforce negative-balance protection, ensuring that losses cannot exceed the funds held in a trader’s CFD account. ASIC’s proposal seeks to apply these same safeguards to the newly covered crypto-settled contracts.
Exclusions and scope
Not all crypto-derived products would be captured. Futures and options on digital assets that have a fixed expiry date are slated to remain outside the CFD classification, meaning they would continue to be regulated under separate provisions.
Legislative backdrop and licensing deadlines
Separately, legislation enacted in April will bring cryptocurrency exchanges and tokenised custody platforms under the nation’s financial-services licensing regime. The new licensing framework is scheduled to become operational on 9 April 2027. In the meantime, firms that have been operating under temporary enforcement relief must either submit a formal licence application by 30 September or amend their existing licences to align with the updated requirements.
Consultation timeline
The regulator has opened a public comment period on the proposed amendments, with submissions accepted until 9 November. Stakeholders—including exchanges, broker-dealers and consumer-advocacy groups—are invited to weigh in on the potential impact of extending leverage caps and other protections to crypto-settled CFDs.
Why it matters
Applying established leverage caps and protective measures to crypto-settled CFDs would align digital-asset trading with the broader Australian financial-services framework, potentially reducing the risk of retail losses in a volatile market. The proposal also signals a broader regulatory intent to integrate crypto activities, such as exchange operations and custodial services, into the country’s standard licensing regime. By setting clear deadlines for licensing and feedback, ASIC aims to provide certainty for market participants while safeguarding investors as the sector matures.
