Australia Proposes Leverage Limits for Crypto Derivatives

Update (Oct 12, 11:48 UTC): Australia's ASIC has proposed extending retail CFD protections and leverage limits to derivatives settled in digital assets.

The U.S. Commodity Futures Trading Commission (CFTC) has initiated a rulemaking process targeting a specific category of crypto trading: transactions offered to retail customers with leverage, margin, or financing, according to CryptoNews. The agency is seeking public comments on how a federally registered crypto venue might operate under its existing statutory authority, invoking section 2(c)(2)(D) of the Commodity Exchange Act.

Under the proposal, ordinary fully paid spot trades would not automatically move into the new system. Agency Chair Michael Selig stated that voluntary federal registration would not require every crypto exchange or spot trade to transition to the CFTC, noting that a broader mandate would require congressional action. The contemplated products are referred to as crypto asset transactions, or CTXs, with a potential registration path designated as crypto asset markets, or CAMs.

Retail Leverage and Financing Rules

The consultation outlines that the initial dividing line rests on retail leverage. A customer who pays the full price of an asset with available funds and receives an ordinary spot balance is not captured simply because an exchange lists the token. Conversely, a financed purchase where a platform supplies credit falls closer to the retail commodity transaction class identified by the statute, depending on specific delivery terms and the nature of customer control.

The Commodity Exchange Act includes an exception for covered sales resulting in actual delivery within 28 days. According to CFTC guidance, this requires a customer to secure possession and control of the entire purchased quantity, including the financed portion, and be able to use it freely away from the execution venue by the deadline.

Consultation Scope

The consultation has not set binding leverage caps, approved an exchange, displaced state requirements, or established a final compliance date. The agency is currently gathering input to inform potential future rulemaking.

Key facts

• The CFTC initiated an advance notice seeking comment on retail crypto commodity transactions involving leverage, margin, or financing.
• The proposal invokes section 2(c)(2)(D) of the Commodity Exchange Act to examine crypto asset transactions (CTXs) and crypto asset markets (CAMs).
• Ordinary fully paid spot trades do not automatically fall under the proposed registration path.
• The statutory actual delivery exception requires customer control within 28 days without venue retention of legal rights.