Australia's Securities and Investments Commission (ASIC) has proposed extending leverage caps and negative balance protection to certain derivatives settled in digital assets, opening a consultation that closes on Nov. 9.

The proposal, published Monday, targets contracts for difference (CFDs) — instruments that let retail traders speculate on price movements without owning the underlying asset. Australia's existing CFD regime, introduced in 2021, caps leverage, requires providers to close positions when account funds fall below specified margin levels, and limits client losses to the balance in a CFD trading account.

Those safeguards currently apply only to contracts settled in cash or by offsetting obligations between the parties. ASIC now wants to bring contracts settled by transferring digital assets inside the perimeter, including tokens that track non-crypto assets, as long as they satisfy the other criteria for a CFD.

Not every crypto derivative falls within scope. ASIC said certain crypto futures and options with fixed expiration dates would remain outside the CFD rules, preserving the boundary between exchange-traded-style expiring contracts and open-ended CFD structures.

What would change for crypto trading platforms?

The operational consequences fall hardest on platforms offering crypto-settled speculative products to Australian retail clients. If the extension proceeds, providers would need to:

• Apply leverage caps to digital-asset-settled CFDs.
• Implement automated close-out rules when account balances drop below margin thresholds.
• Extend negative balance protection so retail losses cannot exceed deposited funds in the CFD account.

For issuers already holding an Australian financial services licence, the changes translate into product governance, risk controls and disclosure work. For offshore platforms serving Australian clients, the proposal narrows a settlement-methodology gap that previously placed crypto-settled contracts beyond the CFD regime's reach.

How does this fit Australia's broader crypto framework?

The CFD proposal is the latest step in a widening Australian regulatory perimeter for digital assets. In April, Australia passed legislation bringing crypto exchanges and tokenized custody platforms under its financial services licensing framework, with the new regime taking effect on April 9, 2027.

ASIC has also tightened the transition path for firms operating under temporary enforcement relief: crypto businesses relying on that relief under existing financial services law had to apply for licenses by Sept. 30 or seek variations to their existing licenses.

The enforcement backdrop has hardened in parallel. Australia has removed 45 crypto and remittance registrations over the past year, according to the regulator, signaling an intensified screening effort across the sector.

What happens next?

Stakeholders have until Nov. 9 to submit feedback on the proposed extension and amendments. Following consultation, ASIC will finalize the rule changes that determine when crypto-settled derivatives must carry the same retail protections as their cash-settled counterparts — well before the April 2027 licensing regime reshapes the broader market structure for digital asset providers in Australia.