ASIC wants Australia’s retail CFD safeguards to cover qualifying contracts settled by transferring digital assets, not only contracts settled in cash. The proposal would extend existing protections to eligible retail clients as ASIC seeks a 10-year renewal of its CFD intervention order.
- Qualifying digital-asset-settled CFDs could face existing retail safeguards.
- ASIC is seeking a 10-year renewal of its CFD intervention order.
- ASIC reported that 68% of retail CFD clients lost money in 2023-24.
What would the proposal cover?
A contract for difference (CFD) lets traders speculate on changes in an asset’s value without owning it. CFDs can use leverage, or borrowed funds, to increase the size of a position and magnify both gains and losses.
Australia’s existing CFD rules generally cover contracts settled in cash or through offsetting obligations between counterparties. ASIC proposes expanding the definition to include qualifying CFDs settled through digital-asset transfers. The contract’s underlying exposure could be tied to an asset outside the cryptocurrency market.
Settling a contract in a digital asset does not mean the trader owns the asset that determines its price. The proposal concerns how a qualifying contract is settled. It would not bring every crypto derivative under the order. Certain cryptocurrency futures and options with fixed expiration dates would remain outside it. ASIC’s proposal materials do not spell out all the criteria for determining whether a product qualifies.
ASIC’s view is that products with similar economic features and risks should receive similar treatment, regardless of how they are settled. That does not make them identical. Digital-asset transfers can also carry custody, transfer and operational risks.
What protections would apply?
A product intervention order is a regulatory measure that restricts or sets conditions on a financial product to address consumer harm. The existing CFD order sets leverage limits, requires positions to close when client funds fall below prescribed levels, provides negative balance protection and restricts incentives used to attract retail traders.
Negative balance protection limits a client’s losses to the funds in their CFD account, subject to the applicable rules. ASIC proposes keeping these protections for eligible retail CFD clients. They would not apply to all crypto traders or every derivative product.
The proposed changes would also clarify margin rules. Margin is the money a provider requires to support a position. Initial margin is the amount required to open one. ASIC would clarify how initial margin applies to CFDs linked to options and require providers to meet the margin requirement for each CFD position separately.
Providers could not lower the required margin by netting opposing positions, or offsetting one position against another when calculating the collateral required. The proposed amendments would also clarify restrictions on inducements, meaning offers designed to attract or retain retail traders. These include discounts and certain educational or research tools. Providers would have to keep records of permitted discount offers.
ASIC also proposes replacing “cryptoasset” with “digital asset” throughout the order. The terminology would change, but the central question would remain whether a product meets the definition of a CFD.
Retail losses underpin the renewal bid
ASIC is seeking ministerial approval to renew its CFD product intervention order for another 10 years. The current order took effect on March 29, 2021, and is scheduled to expire on May 23, 2027.
ASIC says 68% of retail clients who traded CFDs in Australia during the 2023-24 financial year recorded a net loss. Combined net losses among retail clients topped A$458 million, including A$73 million in fees. Of retail clients who traded CFDs over options, 85% lost money.
ASIC says the order has reduced harm, but losses remain substantial enough to justify the protections. The regulator says it could revoke the order before a renewed period ends.
The figures cover reported losses among retail CFD clients in a specific financial year. They do not show that every trader lost money or explain what caused each loss. Still, they highlight the risks tied to leverage, fees and complex margin requirements.
Part of a wider regulatory framework
The CFD proposal is separate from a licensing framework for digital asset businesses. The Corporations Amendment (Digital Assets Framework) Act 2026 passed Parliament on April 1 and received Royal Assent on April 8. It is scheduled to take effect on April 9, 2027, establishing a dedicated financial services licensing framework for digital asset platforms and tokenized custody platforms.
ASIC will oversee licensing and supervision under that framework, including requirements for custody, transactions, settlement and financial resources. Some businesses already licensed under existing rules may need to update their authorizations. The framework is separate from the proposed CFD order renewal. Neither measure means all digital assets or crypto-related products will be regulated in the same way.
Key questions and answers
-
Will the proposal cover every crypto derivative?
No. It would cover qualifying CFDs settled through digital-asset transfers. Certain cryptocurrency futures and options with fixed expiration dates would remain outside the order.
-
What protections would the proposal apply?
For eligible retail CFD clients, it would keep leverage limits, position-closing requirements, negative balance protection and restrictions on inducements, while clarifying margin rules.
-
Why is ASIC seeking a 10-year renewal?
ASIC says the current order has reduced harm, but retail losses remain substantial. The renewal requires ministerial approval, and ASIC says it could revoke the order earlier.
-
When is the separate digital asset licensing framework scheduled to begin?
It is scheduled to take effect on April 9, 2027. It is separate from the proposed changes to retail CFD rules.
