Australia Introduces Leverage Caps for Crypto-Settled Derivatives
Key Summary
Australia's Securities and Investments Commission (ASIC) has proposed extending leverage limits and protections against negative balances to certain crypto-settled derivatives, aiming to safeguard retail investors. The proposed rules would cover contracts for difference (CFDs) settled in digital assets, including those tracking non-crypto assets. ASIC is seeking feedback on the proposed extension until November 9, 2026.
Proposed Extension of Leverage Limits and Protections
ASIC's proposal aims to extend leverage limits and protections against negative balances to certain crypto-settled derivatives. The proposed rules would cover contracts for difference (CFDs) settled in digital assets, including those tracking non-crypto assets. This move is expected to safeguard retail investors from potential losses.
Regulatory Framework
Australia's existing framework, introduced in 2021, caps leverage and requires providers to close positions when account funds fall below specified levels. Negative balance protection also limits losses to the funds in a client's CFD trading account.
Feedback Process
ASIC is seeking feedback on the proposed extension until November 9, 2026. The regulator has also required crypto firms relying on temporary enforcement relief under existing financial services law to apply for licenses by September 30 or seek changes to their existing licenses.
Australia's Crypto Regulatory Environment
Australia passed legislation in April to bring crypto exchanges and tokenized custody platforms under its financial services licensing framework, with the new regime taking effect on April 9, 2027. ASIC also required crypto firms to comply with the new regulations by September 30, 2026.