Australian securities regulator calls for improvement in retail crypto derivatives

The regulator is concerned issuers are offering unregulated digital assets alongside regulated financial products, which may confuse retail investors

article-image

Rudy Balasko/Shutterstock, modified by Blockworks

share

The Australian Securities and Investments Commission (ASIC) is intensifying its focus on the distribution of “high-risk” over-the-counter derivatives to retail clients, including crypto derivatives.

According to a report titled “Design and Distribution Obligations: Retail OTC Derivatives,” the regulator is concerned about issuers offering unregulated digital assets alongside regulated financial products. 

The report, published on Tuesday, states that such a practice risks confusing retail investors, who may wrongly assume the same consumer protections apply to both regulated and unregulated products. 

It follows last month’s lawsuit by the regulatory against trading platform eToro, alleging violations in design and distribution requirements related to its CFD offerings, which have allegedly resulted in substantial losses for retail investors. 

“We are closely monitoring offers to retail investors of high-risk crypto-linked products that constitute financial products or the provision of financial services,” ASIC said in its report. “Retail investors may also underestimate the risks.”

ASIC’s Deputy Chair, Karen Chester, expressed the regulator’s dissatisfaction with how issuers, especially those dealing in crypto derivatives and CFDs, are adhering to design and distribution obligations. 

“We will not hesitate to take further action, from stop orders through to court proceedings, especially where we see egregious failures,” Chester said in a statement.

A CFD is a contract between an investor and a broker to exchange the difference in the value of an asset between the time the contract is opened and closed. CFDs are typically used for speculative trading and hedging.

ASIC sought an intervention into such products three years ago when it imposed conditions on their issuance and distribution in an attempt to strengthen retail consumer protections.

Those included limiting the leverage retail clients can use for CFDs to just 2:1 for crypto, meaning for every dollar the retail client has in their trading account, they can only take a position up to twice that amount.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

What Grayscale’s watching going into the second quarter and why crypto had a rough start to the year

article-image

Sol’s price drop was partially triggered by one of the year’s more chaotic memecoin events

article-image

Are digital assets just part of “normal” finance conversations now?

article-image

It’s a busy week as DC prepares for confirmations and policies that may have major impacts on crypto

article-image

NFT collection Azuki is releasing anime-inspired decks for a physical trading card game

article-image

Fidelity is planning a stablecoin launch, FT reports, as more companies flock to the digital-dollar business