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Australia’s financial regulator is proposing to extend its retail contract-for-difference (CFD) protections to qualifying crypto derivatives settled by transferring digital assets. The change targets a settlement-based gap that can leave products with CFD-like risks outside leverage, margin, negative-balance and inducement rules. ASIC’s consultation follows A$458 million in aggregate net retail CFD losses during 2023–24, although that figure covers CFDs generally, not crypto derivatives alone.
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.
The proposed amendment would modernise the definition of a CFD so that qualifying products receive the same protections whether they settle in cash, through set-off, or by transferring digital assets. ASIC says some products can have the same economic exposure and loss potential as CFDs but avoid the order solely because of their settlement method. That difference creates an opportunity for regulatory arbitrage.
Which products would qualify
A product would still need to have the other characteristics of a CFD: its value must be derived from an underlying asset; it must have no fixed termination date, or normally be terminated before a fixed date; the holder must have a right to terminate; and settlement must occur by cash, set-off or transfer of digital assets. Changing the settlement limb alone would not bring every crypto product into the regime.
| Issue | Current position | Proposed position |
|---|---|---|
| Settlement | The order generally covers cash- or set-off-settled CFDs. Some economically similar products settled by transferring digital assets can fall outside it. | Qualifying CFD-like products would be covered regardless of whether settlement is cash, netted or by digital-asset transfer. |
| Leverage and margin controls | Apply where the product is already within the intervention order. | Would also apply to newly captured qualifying products. |
| Negative-balance protection | Available for products covered by the order. | Would extend to qualifying digital-asset-settled products brought inside the definition. |
| Inducements | Certain bonuses and other inducements are prohibited for covered CFDs. | The same restrictions would apply to products newly covered by the amended definition. |
| CFDs over options | ASIC is reviewing whether some products can expose retail clients to losses greater than the premium paid. | The consultation seeks evidence on whether those products should be prohibited or restricted; no final decision has been made. |
| Fixed-expiry crypto options and futures | Generally outside the CFD order when they do not meet the CFD characteristics. | Some fixed-expiry crypto options and futures would remain outside the order. |
Why the A$458 million loss 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, including A$73 million in fees. The total is for Australian retail clients trading CFDs across the market; it is not a published crypto-only loss figure.
ASIC Commissioner Alan Kirkland said: “The evidence demonstrates that ASIC’s CFD intervention order has materially reduced retail investor harm by addressing key drivers of harm, like excess leverage.” He added: “However, CFDs continue to remain highly risky products. ASIC’s data repeatedly shows that most retail investors lose money trading CFDs, with our most recent data indicating losses over $458 million, including $73 million in fees.”
What protections apply when a product is covered
Leverage limits
Leverage limits restrict how large a position a retail client can control relative to the money deposited. They are designed to reduce the speed and size of losses when the underlying asset moves against the trader.
Standardised margin close-out
A standard close-out framework requires a provider to close positions when a client’s available margin falls to the prescribed threshold. This reduces the chance that losses continue unchecked across multiple open positions.
Negative-balance protection
Negative-balance protection prevents a retail client from owing more than the funds held in the trading account as a result of covered CFD positions. It does not prevent the deposited balance from being lost.
Restrictions on inducements
The order bans certain inducements, such as offers designed to encourage clients to trade more frequently or take on larger positions. The proposed change would stop providers from avoiding those restrictions by using a digital-asset settlement structure for an otherwise qualifying CFD.
Evidence that the existing order reduced harm
ASIC says that within six months of the existing intervention order, aggregate net client losses fell 91%, from A$372 million to A$33 million per quarter. It also reported an 87% reduction in margin close-outs. These are ASIC’s reported market-wide results and do not mean every retail trader became profitable.
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How classification can remove protections
The Binance Australia Derivatives case illustrates why the product perimeter matters. ASIC says 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 the protections that should have applied.
The case involved client classification, rather than proving that every crypto derivative is a CFD. Its significance is that an incorrect classification can determine whether retail safeguards apply at all.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Other enforcement and supervisory action
In a January 2026 sector review, ASIC secured nearly A$40 million in refunds for more than 38,000 retail investors. The review also led to improvements in target-market determinations, onboarding questionnaires, reporting and monitoring. Those measures address how products are distributed and supervised, while the proposed CS 64 amendment addresses how certain products are defined.
What happens next
Submissions on CS 64 close at 5 pm AEDT on 9 November 2026. The consultation does not settle the final wording, the exact list of products captured, whether the minister will approve the extension, or when any amendment would commence. Until those decisions are made, a product’s treatment depends on the existing order and its actual legal and economic characteristics.
Quick Recap
What retail traders should check now
- Identify whether a platform describes the product as a CFD, option, future or another crypto derivative.
- Check how the contract is settled: cash, netting, or transfer of a digital asset.
- Read the termination terms, including whether the contract has a fixed expiry and whether the holder can close it.
- Confirm the leverage, margin close-out and negative-balance terms that apply to your account.
- Treat “professional” or other client classifications carefully, because classification can affect access to retail protections.
- Do not assume that a digital-asset settlement mechanism makes a highly leveraged product safer; the proposed rule exists because the underlying risk can remain substantially the same.
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