ASIC's Net Tightening: Australia Targets Crypto-Settled CFD Loophole

Australia’s corporate regulator ASIC has proposed to substantially extend and broaden its retail contract for difference (CFD) protections, in what it says is a critical response to a loophole which allowed leveraged crypto-settled derivatives to evade oversight of its usual mandate. The new proposed regulations – if approved – would extend the existing product intervention order from May 2027 to 2037 and bring contracts settled in digital assets or set-off under the same strict regulatory umbrella as conventional cash CFDs.

The reforms would impose stricter compliance rules across the board, explicitly defining ‘cryptoasset’ as the broader category ‘digital asset’ while retaining key protections including negative-balance protection and strict leverage limits. The rules also crack down on margins, forbidding brokers from netting long and short positions to reduce initial requirements, and impose rigid rules to stop discounts and educational tools from double-counting as prohibited retail inducements.

While it may cut into the amount of speculative retail trading by limiting leverage on token-settled products (set to 2:1 against 30:1 for major forex pairs), for retail traders and brokerages operating in Australia the market impact is likely to lean towards increased consumer protection and compliance burden than an outright ban of trading. But the proposed measures would affirm the legitimacy of regulated digital-asset derivatives, and stakeholders have until November 9, 2026, to submit feedback before the regulation moves to final ministerial sign-off.