Many firms have asked us if cryptocurrency CFDs (“Crypto CFDs”) and other OTC derivatives with cryptocurrency as a reference are reportable under ASIC’s Reporting Rules. To date there has been no definitive position provided by either the regulation or ASIC guidance. Note the ASIC Derivative Transaction Rules (Reporting) 2024 (repealing the previous version of the Reporting Rules) which comes into effect on 21 October 2024 does not change or clarify the current position on the reporting of crypto-assets and provide clarity such as what has been achieved in the EMIR Refit regimes for the UK and EU.
We have outlined considerations below to assist your firm in determining whether to report Crypto CFDs until definitive guidance or regulation is issued.
What is reportable?
Under the ASIC OTC derivatives trade reporting regime, 5 categories
of derivatives are currently reportable:
(a) commodity derivatives (excluding electricity
derivatives);
(b) credit derivatives;
(c) equity derivatives;
(d) foreign exchange derivatives; and
(e) interest rate derivatives.
It would seem that the only category that a Crypto CFD could potentially fall under is ‘commodity derivatives’.
We are aware of informal communications from ASIC in the past that they consider Crypto CFDs should be reported as a commodity derivative. However, until published in writing, this is by no means determinative.
Whether to classify cryptocurrency as a commodity derivative or in one of the other categories for reporting is open to each financial services firm’s own interpretation.
Aside from cryptocurrency, TRAction most commonly report gold, copper, oil, gas, coffee and corn derivatives on behalf of clients as commodity derivatives.
What does TRAction recommend?
The below is TRAction’s indication on the reportability of Crypto CFDs:
| MiFIR | ||
|---|---|---|
| Field | Use | LEI for submission |
| Executing Entity ID | The status of the LEI must be “Issued”, “Pending transfer” or “Pending archival”. | LEI cannot be lapsed. |
| Submitting Entity ID | LEI of Submitting Entity ID must have a status of “Issued”, “Lapsed”, “Pending Transfer” or “Pending Archival”. | LEI can be lapsed. |
| Buyer/Seller IDs | The status of the LEI must be “Issued”, “Lapsed”, “Pending transfer” or “Pending archival”. | LEI can be lapsed. |
| Buyer/Seller Decision Maker IDs | The status of the LEI must be “Issued”, “Lapsed”, “Pending transfer” or “Pending archival”. | LEI can be lapsed. |
If you are concerned about the reportability of your crypto-assets, we would suggest obtaining a legal opinion on which you can rely in the event of any regulatory scrutiny. Please do not hesitate to contact us should you wish to discuss any of the points above.
