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Australia’s financial regulator is proposing to bring certain crypto derivatives settled by transferring digital assets under the same controls that already apply to comparable cash-settled contracts. The change responds to regulatory arbitrage: products can carry the economic risks of contracts for difference (CFDs) yet avoid protections because of how they settle.
What ASIC is proposing
The Australian Securities and Investments Commission (ASIC) released consultation paper CS 64 on 12 October 2026. It proposes extending the existing CFD product intervention order for another 10 years, subject to approval by the responsible minister. The current order expires on 23 May 2027.
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How the settlement loophole works
The order generally covers CFDs settled in cash or through set-off, where the parties exchange the net gain or loss. ASIC says some products with the same economic characteristics and risks can fall outside the order when they are settled by transferring digital assets instead. That difference in settlement method can create a regulatory gap even when a retail customer is taking essentially the same leveraged exposure.
Which products would be captured
Under the proposal, a qualifying product would be covered regardless of whether settlement is cash, netted by set-off, or made through transfer of a digital asset. It would still need to have the other defining CFD characteristics:
- Its value is derived from an underlying asset, rate or reference price.
- It has no fixed termination date, or is normally terminated before any stated date.
- The holder can terminate the position.
- Settlement occurs by cash, set-off or transfer of a digital asset.
The amendment is intended to address substance rather than the label used by a provider. Fixed-expiry crypto options and futures would generally remain outside the intervention order under the proposal.
What is not settled yet
CS 64 is a consultation, not final law. ASIC is also seeking views on CFDs over options that could expose a retail client to losses greater than the premium paid, including whether those products should be prohibited or restricted. The final product list, wording, commencement date and whether ministerial approval is granted remain open.
Current rules versus the proposed scope
| Issue | Current intervention order | Proposed approach |
|---|---|---|
| Settlement method | Generally cash settlement or set-off | Include qualifying products settled by cash, set-off or digital-asset transfer |
| Leverage and margin controls | Apply to products within the CFD definition | Apply the same controls to newly captured digital-asset-settled products |
| Negative-balance protection | Required for covered retail CFDs | Extended to qualifying products brought into scope |
| Margin close-out | Standardised close-out requirements for covered CFDs | Same requirements, regardless of qualifying settlement method |
| Inducements | Certain bonuses and other inducements are banned | Those restrictions would apply to the additional covered products |
| Fixed-expiry crypto options and futures | Generally outside the CFD order | Expected to remain outside its scope |
Why the A$458 million figure matters
ASIC reported that 68% of retail CFD clients made a net loss in the 2023–24 financial year. Aggregate net retail-client losses exceeded A$458 million, and the figure included A$73 million in fees.
That is the total reported loss for Australian retail clients trading CFDs across the sector. It is not a crypto-only loss figure, so it should not be read as saying that every dollar came from crypto derivatives. The statistic instead shows the continuing harm ASIC is trying to address while closing a crypto-specific classification gap.
CFDs magnify small movements in an underlying asset through leverage. A position can therefore lose money rapidly, while financing charges, spreads and other fees increase the amount a client must recover before becoming profitable. The intervention order targets those features rather than attempting to predict whether the underlying asset will rise or fall.
Protections that would apply
Leverage limits
Retail clients could not use unlimited leverage on a covered product. Caps reduce the size of an exposure that can be opened from a given deposit and limit how quickly a small market move can consume available margin.
Standardised margin close-out
Providers must close positions when an account’s margin falls to the required threshold, using a consistent intervention framework rather than leaving the timing entirely to contract terms. This is designed to stop losses escalating after available collateral has been exhausted.
Negative-balance protection
A covered retail client should not owe more than the funds committed to the trading account as a result of ordinary losses on the product. This protection does not make a trade safe or prevent the deposited amount from being lost.
Restrictions on inducements
Certain bonuses, rebates, gifts and other incentives that encourage a client to trade would remain prohibited for products within scope. Removing those prompts is intended to reduce pressure to trade frequently or increase position size.
Evidence that the existing order reduced harm
ASIC’s evaluation found that aggregate net retail-client losses fell 91% within six months of the existing intervention. Quarterly losses declined from A$372 million to A$33 million. ASIC also reported an 87% reduction in margin close-outs, an indicator that fewer accounts were being forced out after severe losses.
ASIC Commissioner Alan Kirkland said the evidence shows the order materially reduced harm by addressing drivers such as excess leverage, while stressing that CFDs remain highly risky and that most retail investors lose money.
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Why product classification matters in enforcement
A 2022–2023 case involving the Australian derivatives operation of Binance illustrates the practical consequence of a classification decision. ASIC said the Federal Court ordered a A$10 million penalty after Oztures Trading Pty Ltd misclassified more than 85% of its Australian client base. Between July 2022 and April 2023, 524 retail investors were exposed to high-risk crypto derivatives without protections that should have applied to them.
ASIC’s January 2026 sector review also secured nearly A$40 million in refunds for more than 38,000 retail investors. The review prompted improvements to target-market determinations, onboarding questionnaires, reporting and ongoing monitoring. Together, those actions show that the regulator is addressing both the perimeter of the rules and compliance with them once a product is inside it.
Timeline and what happens next
- 12 October 2026: ASIC published consultation CS 64 and opened submissions.
- 5 pm AEDT, 9 November 2026: Submissions close.
- Before 23 May 2027: The current CFD intervention order is due to expire unless it is replaced or extended.
- After consultation: ASIC will settle the proposed wording and scope, with the 10-year extension requiring ministerial approval.
Until those steps are complete, a product’s name or marketing description cannot establish whether it is protected. Retail clients need to examine the legal terms, settlement mechanism, leverage, margin rules and whether the contract has a fixed expiry. A digital-asset transfer used for settlement is precisely the feature ASIC wants to prevent providers from using to avoid equivalent CFD protections, but the proposed amendment does not automatically cover every crypto option or futures contract.
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