ASIC Moves to Put Crypto-Settled CFDs Under Retail Rules

Australia's corporate regulator wants its retail derivatives rulebook to cover contracts settled in crypto. It also wants that rulebook to stay for another decade.

ASIC opened a consultation on 12 October on extending and amending the consumer protections that govern contracts for difference. A CFD is a leveraged contract whose payout follows the price of an underlying asset. The regulator's product intervention order has set the terms for selling them to retail clients since March 2021.

The proposal has two parts. ASIC wants the order to remain in place a further 10 years. It also wants the definition of a CFD widened, so that products settled in digital assets sit under the same rules as those settled in cash.

The Definition Change Is the Whole Point

A CFD normally settles in cash or by set-off between the two parties. ASIC proposes to modernise the definition to include CFDs settled through the transfer of digital assets. Products with the same economic characteristics and risks would then be treated consistently, regardless of the settlement method.

The draft instrument spells it out. On termination, the obligations of the parties could be settled in cash, by transfer of digital assets, or by set-off. A digital asset is defined as a digital representation of value or rights whose ownership is evidenced cryptographically. It is held and transferred electronically by distributed ledger technology, or another distributed cryptographically verifiable data structure.

Some products expose retail investors to the same risks as CFDs but may fall outside the current PIO because of how they are settled. The proposed updates ensure protections apply consistently, regardless of whether a CFD is settled by cash, set-off or digital assets.

That is Commissioner Alan Kirkland, and the sentence is the argument. ASIC says the aim is to reduce the risk of regulatory arbitrage, where a product is built to look like something the rules do not reach.

Which Crypto Contracts Fall Outside

Not everything with a crypto flavour lands here. ASIC says some fixed-expiry crypto derivatives, including certain crypto options and futures, would remain outside the product intervention order.

For a contract to be caught, it would still have to satisfy the other elements of the CFD definition. It has to derive value from an underlying. It does not terminate on a fixed date, and is not typically terminated before one. And it can be terminated by the holder. Contracts with no expiry are the shape the proposal reaches. Dated options and futures largely are not.

Margin, Netting and the Discount Problem

ASIC wants to confirm that minimum initial margin must be applied separately to each CFD issued to a retail client. That way, long and short exposures across multiple contracts could not be netted when that margin is worked out.

That follows a specific finding. In its 2024-25 sector-wide review, ASIC found that more than half the CFD sector had contravened the order. Issuers offered margin discounts to retail clients who took on opposing long and short positions. Those clients were left with higher funding costs and no ability to profit from the offset. Following the intervention, 28 issuers refunded more than $36 million to affected retail clients.

The proposals also cover the paperwork around permitted discounts. Records would need to be kept for seven years. They also clarify that educational or research tools are excluded from the inducements ban only where they are provided to all retail clients, and are not used to encourage specified trading behaviour.

Options get their own treatment. In the 2023-24 financial year, 85% of retail clients trading CFDs over options made a net loss. ASIC is asking whether contracts that expose retail clients to losses greater than the premium should stay available at all. Where a client's maximum loss is limited to the premium, the proposed minimum initial margin would be that premium. Structures with unlimited downside would use the margin requirement for the underlying reference asset.

What the Order Has Done So Far

The order rests on four protections: leverage limits, standardised margin close-out arrangements, negative balance protection, and a ban on certain inducements such as trading credits, rebates or free gifts.

The leverage caps are the part retail traders feel most. Crypto-referencing CFDs are capped at 2:1 for retail clients, against 30:1 for major currency pairs, 20:1 for minor pairs, gold or major stock market indices, 10:1 for other commodities or minor indices, and 5:1 for shares.

Crypto leverage has not returned to its pre-crash levels a year after the $19 billion crash. Derivatives margin is where retail traders meet these rules first.

ASIC says the effect shows in the data. Within six months of the current order taking effect, aggregate net losses by retail client accounts fell by 91%. The average number of retail clients trading per quarter in 2023-24 was about 76% lower than in the 12 months before the order commenced.

The losses have not gone. ASIC's most recent figures show retail CFD losses over a 12-month period still exceeded $458 million, including $73 million in fees. In the 2023-24 financial year, 68% of retail clients who traded CFDs made a net loss. In January 2026, after a whole-of-industry review of 52 licensed issuers, ASIC secured the return of nearly $40 million to more than 38,000 retail investors.

The Deadline Is 9 November

Submissions close at 5pm AEDT on Monday 9 November 2026, at Market.Intermediaries@asic.gov.au. They cover both the proposed extension and amendments, and the separate question about CFDs over options.

Nothing is settled yet. Subject to Ministerial approval, the extended order would remain in force until 2037 unless revoked earlier. The current order started on 29 March 2021 and is due to expire on 23 May 2027. The instrument itself is still a draft, marked draft only and not for signature. It would commence the day after it is registered on the Federal Register of Legislation.

Two questions carry the most weight for retail traders: whether the 10-year extension is approved, and whether CFDs over options stay on the shelf. The first answers arrive after 9 November.