ASIC proposes leverage caps for crypto-settled derivatives

what happened

Cointelegraph reports that Australia’s securities regulator, the Australian Securities and Investments Commission (ASIC), has proposed extending leverage limits and other retail-investor safeguards to some contracts settled in crypto. The proposal concerns contracts for difference (CFDs), which allow traders to take positions on price movements without owning the underlying asset.

ASIC wants the CFD framework to cover instruments settled through the transfer of digital assets, including products linked to non-crypto assets, when they satisfy the other criteria for a CFD. Some crypto futures and options with fixed expiration dates would remain outside the proposed rules.

Australia’s framework, introduced in 2021, limits leverage, requires providers to close positions when account funds fall below specified thresholds, and provides negative-balance protection so losses cannot exceed the funds in a client’s CFD account. ASIC is accepting feedback on the extension and amendments until Nov. 9. Separately, legislation passed in April will place crypto exchanges and tokenized custody platforms under the financial-services licensing regime from April 9, 2027. Crypto firms using temporary enforcement relief had to apply for licenses by Sept. 30 or seek amendments to existing licenses.

why it matters

The proposal could raise compliance requirements for crypto-derivatives providers and limit the leverage available to retail traders. It also reinforces Australia’s broader move to bring crypto platforms within the established financial-services oversight framework.

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