Many firms have asked us if cryptocurrency (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.
We have outlined considerations below to assist your firm in determining whether to report Crypto CFDs until definitive guidance 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 that they consider cryptocurrency CFDs should be reported as a commodity derivative. However until published in writing, this is by no means determinative. Whether you classify Crypto a commodity is open to each financial services firm’s own interpretation. The commodity derivatives we most commonly report on behalf of clients include gold, copper, oil, gas, coffee and corn.
What does TRAction recommend?
The below is TRAction’s indication on the reportability of Crypto CFDs:
|Potential Scenarios||Report Crypto CFDs|
|If you do classify cryptocurrency as a commodity||Yes|
|If you don’t classify cryptocurrency as a commodity||No|
If you are concerned about the reportability of your Crypto products, 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.
Angela works in our Sydney office. At TRAction, she provides regulatory support to our clients, monitors changes in the worldwide regulatory environment relating to trade and transaction reporting, assists with business development and client onboarding as well as development of PR and marketing strategies. Angela has several years of experience working in legal and compliance for financial services companies. She previously practiced in a leading boutique financial services law firm in Sydney as a solicitor with a focus on licensing, compliance, AML/CTF and M&A. Angela has a double degree in Actuarial Studies and Law from the Australian National University and is admitted as a solicitor in Australia.