Australia Moves to Put Crypto-Settled Derivatives Under Its 2:1 Leverage Cap

Australia's markets regulator is closing a loophole that let crypto-settled derivatives dodge its retail trading rules.

On Monday, the Australian Securities and Investments Commission (ASIC) proposed rewriting its contracts-for-difference (CFD) rulebook so that it no longer matters how a contract settles — in cash, by set-off, or through a transfer of digital assets.

Same risk, same rules

The existing product intervention order has been in force since March 2021. It caps leverage at 2:1 for CFDs referencing crypto-assets and 30:1 for major currency pairs, standardises margin close-outs, and gives retail clients negative balance protection. Those protections only reached contracts settled in cash or by offsetting obligations, so products with the same economics could sit outside them.

ASIC wants the definition modernised to capture contracts settled through the transfer of digital assets, including derivatives tracking non-crypto assets. It also plans to confirm that initial margin applies to each CFD separately and cannot be reduced by netting opposing positions.

Not everything gets swept in. Crypto futures and options with fixed expiration dates stay outside the CFD rules. Separately, ASIC is asking whether options-based CFDs that can lose more than the premium paid should remain available to retail investors.

The bill is still brutal

The original order worked. Aggregate net losses on retail client accounts fell 91% within six months of it taking effect, from $372 million to $33 million per quarter. But ASIC's most recent 12-month data still shows retail losses above $458 million, including $73 million in fees.

The key changes on the table:

• The definition of a CFD would cover digital-asset-settled contracts
• Initial margin cannot be netted across opposing positions
• Terminology shifts from "cryptoasset" to "digital asset"

Why you should care

The current order expires on 23 May 2027, and the replacement would run until 2037 subject to ministerial approval. Feedback closes at 5pm AEDT on 9 November 2026.

The takeaway is bigger than Australia. Regulators are moving toward judging a product by its economics rather than its settlement rail. If you trade leverage through an ASIC-licensed venue, the margin you are handed may shrink — and stacking positions against one balance to dodge margin rules is explicitly in the crosshairs.