Australia's ASIC Proposes Leverage Caps for Crypto-Settled Derivatives

Australia's securities regulator, the Australian Securities and Investments Commission (ASIC), has proposed extending retail investor protections for contracts for difference (CFDs) to derivatives settled using digital assets. The move aims to close a regulatory gap in leveraged crypto trading by broadening the definition of CFDs to include products settled through digital asset transfers, rather than solely through cash or offsetting transactions.

If adopted, Australian traders using crypto-settled CFDs would receive the same safeguards as those trading cash-settled CFDs, including leverage limits, mandatory margin close-outs, and protections against negative balances — measures introduced under Australia's existing CFD framework in 2021. ASIC clarified, however, that certain crypto futures and options with fixed expiration dates would remain outside the proposed framework. The regulator is accepting industry and stakeholder feedback on the extension and amendments until Nov. 9.

The proposal is part of Australia's broader effort to strengthen its digital asset regulatory landscape. In April, the country passed legislation bringing crypto exchanges and tokenized custody platforms under its financial services licensing framework, set to take effect in April 2027. ASIC has also required crypto firms relying on temporary regulatory relief to apply for licenses by Sept. 30, signaling a tightening stance on crypto oversight across the board.