Crypto perpetuals — the no-expiry futures contracts that dominate global crypto derivatives volume — sit in an uncomfortable spot in Australian regulation. They’re not banned. They’re not openly endorsed. And after the Digital Assets Framework Bill 2025 took effect on 1 April 2026, the rules around offering them to Australian retail clients have tightened meaningfully. This guide explains what perpetuals are, how the ATO and ASIC actually treat them in 2026, and what every Australian trader using them — or thinking about it — needs to know.
What perpetuals actually are
A perpetual — often called a “perp” — is a futures contract on a crypto asset that has no expiry date. Traditional futures expire on a set date, forcing settlement. Perpetuals stay open indefinitely, kept in line with the spot price through a mechanism called the funding rate.
The funding rate is paid periodically — usually every eight hours — between holders of long and short positions. When perpetuals trade above spot, longs pay shorts. When they trade below spot, shorts pay longs. The mechanism pulls the perp price back toward spot without anyone needing to deliver the underlying asset.
Perpetuals are the deepest, most liquid crypto market in the world. Daily volume on BTC and ETH perpetuals across the major venues regularly exceeds spot volume by a wide margin. They offer leverage — up to 100x on some offshore venues — that simply isn’t available in spot markets.
How ASIC treats perpetuals
ASIC’s position is that perpetuals are functionally equivalent to contracts for difference (CFDs). They settle in cash, they’re leveraged, and they reference an underlying asset price without conveying ownership of the asset itself. That framing pulls perpetuals into ASIC’s existing CFD regulatory regime — which is one of the strictest in the developed world.
The practical implications under the 2020/986 Product Intervention Order, which sets ASIC’s retail CFD rules:
- Retail leverage on crypto CFDs is capped at 2:1. The 100x leverage available on offshore venues is not available to Australian retail clients through ASIC-regulated platforms.
- Negative balance protection is mandatory. Retail clients cannot lose more than the funds in their trading account.
- Standardised risk warnings must be displayed. Platforms must disclose the percentage of retail client accounts that lose money — the figure typically sits between 70% and 85%.
- Margin close-out rules apply. Positions must be closed automatically when equity drops below 50% of initial margin.
European regulators (ESMA in the EU, FCA in the UK) have adopted similar positions. The Australian regime is broadly aligned with global best practice for retail derivatives.
What changed in 2026
The Digital Assets Framework Bill 2025 didn’t directly target perpetuals, but its broader effects reshape how Australian traders access them.
From 1 April 2026, platforms holding digital assets for Australian clients require an AFSL. Several offshore exchanges that previously accepted Australian clients without local authorisation have pulled out or imposed restrictions. Others have applied for licences. ASIC’s transitional no-action position runs until 30 June 2026; after that, operating without authorisation carries real enforcement risk.
The practical result: the number of platforms offering perpetuals to Australian retail clients has dropped, and the ones still operating are increasingly bringing themselves inside the local regulatory framework — which means the 2:1 retail leverage cap applies to the perpetual products they offer.
What about using offshore venues directly?
Some Australian traders continue to use offshore perpetual venues that don’t accept Australian clients officially but technically still allow access. Three things worth understanding about this approach.
It’s legally grey, not legally clear. Using a platform that doesn’t legally accept Australian clients exposes you to the platform’s terms of service, which typically allow account closure and asset confiscation if your jurisdiction is detected. It also means you have no dispute resolution path — AFCA can’t help you, and Australian courts have no jurisdiction.
The tax position is the same. The ATO doesn’t care which venue you used. Australian residents owe tax on gains and losses wherever realised. Using offshore venues doesn’t make perpetual trading invisible to the ATO — and the data-matching programs increasingly reach offshore platforms through international cooperation.
The 100x leverage isn’t an edge. Statistically, retail clients using high leverage on perpetuals lose money at much higher rates than those using lower leverage or spot. The leverage you can technically access offshore isn’t the same as the leverage that makes you money.
ATO tax treatment of perpetual profits and losses
For most Australian retail traders, perpetual trading produces ordinary income — not capital gains. The ATO generally treats CFDs and similar derivatives as part of a profit-making activity rather than long-term investment. That means:
- Profits are taxed at your full marginal rate. No 50% CGT discount applies.
- Losses are deductible against other ordinary income — which can be more useful than CGT losses for someone with high salary and trading losses, because ordinary losses offset wage income.
- Funding rate payments are part of the position’s profit-and-loss calculation. Net funding paid reduces taxable profit; net funding received adds to it.
The line between “investor” and “trader” for ATO purposes depends on factors like trading frequency, volume, sophistication, and whether trading is conducted in a business-like manner. Active perpetual traders almost always fall on the trader side of that line.
Understanding the funding rate
The funding rate is the cost — or the income — of holding a perpetual position over time. Traders new to perps often ignore it and discover their position has been quietly bleeding capital every eight hours.
When the funding rate is positive, longs pay shorts. A 0.01% rate doesn’t sound like much — until you realise it compounds three times a day. Hold a leveraged long position through a sustained positive funding period and the funding alone can eat several percent of your position size in a week.
Conversely, when funding is negative, shorts pay longs. Sustained negative funding rewards long positions even if the underlying price doesn’t move much. Some sophisticated traders run delta-neutral strategies — long perp, short spot — to harvest funding while avoiding directional risk.
Who should trade perpetuals?
An honest answer: most Australian retail traders shouldn’t. The combination of leverage, funding costs, 24/7 markets, and the statistical reality that most retail leveraged traders lose money makes perpetuals one of the harshest playgrounds in finance.
The traders who do well with perpetuals tend to share three characteristics. They use modest leverage — 2x to 5x at most, not the 50x or 100x available offshore. They have a clearly defined strategy with documented risk rules. And they’re using perps for specific reasons (hedging spot, harvesting funding, expressing directional views with capital efficiency) rather than because the leverage is exciting.
The takeaway
Crypto perpetuals are legal for Australian retail traders to access through appropriately licensed platforms, with leverage capped at 2:1 under ASIC’s product intervention regime. They’re not a banned product, but they’re a strictly regulated one — and the 2026 regulatory shift has further consolidated which platforms can lawfully offer them.
For most retail traders, the spot market handles 95% of what perps would let them do, with less leverage, simpler tax treatment, and meaningfully lower risk of catastrophic loss. Perps belong in the toolkit of experienced traders with clear strategies — not in the early experimentation of someone learning the markets.
For more on the Digital Assets Framework Bill that reshaped the Australian regulatory landscape in 2026, see our explainer. For the broader ASIC regime around AI trading platforms, see our guide. For the leverage limits in detail, see our ASIC leverage limits explainer. To learn how Impulse Cashholm operates inside the ASIC regulatory framework, visit How It Works or the FAQ.
Crypto derivatives are complex, leveraged products. The majority of retail traders in similar products lose money. This article is general in nature and does not constitute financial, tax, or legal advice. Speak to a licensed Australian financial adviser and registered tax agent before engaging with perpetual contracts.