• ASIC does not allow crypto leverage to be higher than 2:1; Bitget, at 125:1, does not have a license.
• Unregulated futures do not provide Australian investors with essential protection and legal redress.
• Various international regulators have warned about unlicensed crypto products by Bitget.

The regulator, Australian Securities and Investments Commission (ASIC), has warned cryptocurrency exchange Bitget that it is providing unlicensed crypto futures products to Australian investors, raising concerns of investor protection and market integrity. Bitget has been selling crypto futures contracts on leverage to 125:1, well beyond the 2:1 leverage that ASIC has allowed on licensed crypto derivatives.

Bitget markets these futures as a product that gives the possibility of speculating on the movement of cryptocurrency prices through its website and downloading its mobile application, which can be done in Australia. Nevertheless, ASIC pointed out that investing in such highly leveraged derivatives may subject the investor to increased losses since small capital amounts govern vast positions. The regulator emphasized that unlicensed services deprive investors of vital safeguards such as the right to dispute resolution, client money separation, and assured standards of operation required by Australian law.

Leverage Risks and Regulatory Boundaries in Crypto Derivatives

The maximum leverage ratio set by ASIC on certain cryptocurrency derivatives is 2:1 and it is meant to shield retail investors against excessive risk exposure. Bitget has created an offer of 125:1, which exceeds this threshold and increases possible profit, but gives a real chance to lose a lot of money. ASIC pointed out that this leverage can be used to a large extent, but cautioned that this increases the losses in fluctuating markets.

Although Bitget is registered with AUSTRAC, the Australian financial intelligence agency, to provide basic services of crypto exchanges, it does not possess the wider financial services licence to provide derivatives or futures trading. This difference exposes investors to risk when they trade in the futures of Bitget, which is not within the Australian regulatory framework.

To compound ASIC’s concern, the activities of Bitget have attracted the attention of various regulators across the world, with Germany’s BaFin issuing a warning, and others in Canada, France, Cyprus, Malaysia, Spain, and Japan giving warnings. Before the announcement by ASIC, Bitget had been putting up disclaimers in its Australian marketing claiming that it had not licensed these derivative products and still proceeded to offer them.

Global Regulatory Pressure Mounts on Bitget

The warning from ASIC is only a part of a bigger trend of the strict regulation of cross-border crypto service providers. The regulator emphasized that the platforms dealing with derivatives in Australia should receive the relevant licensing; otherwise, they will face legal charges and reputational losses. This would follow the global trend of making sure that there is jurisdictional compliance in investor protection of the crypto derivatives market, which has become more complicated.

The parent company of Bitget, BTG Technology Holdings Limited, has also been widening its regulatory presence, receiving a license to operate in Georgia, where it provides services of the exchange of digital assets and the storage of custodial wallets. However, the company is not compliant in Australia in terms of trading derivatives.