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On March 28, the staff of the Commodity Futures Trading Commission (CFTC) issued two press releases announcing the withdrawal of two previous advisories that reflected the agency’s heightened…
United States
Technology
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On March 28, the staff of the Commodity Futures Trading
Commission (CFTC) issued two press releases announcing the
withdrawal of two previous advisories that reflected the
agency’s heightened review approach to digital asset
derivatives.
These announcements appear to mark the end of the CFTC’s
heightened review of digital asset products. The CFTC rules
certainly still apply, but this seems to be a deliberate move by
the CFTC to start treating digital asset derivatives like other
CFTC-regulated products. It also gives a glimpse of how the CFTC
would regulate digital asset spot transactions if Congress gives it
the authority to do so.
The first advisory the
CFTC withdrew was Staff Advisory No. 18-14, Advisory with
Respect to Virtual Currency Derivative Product Listings, which
was issued on May 21, 2018. The withdrawal is effective
immediately. That advisory provided certain enhancements that
CFTC-regulated entities were asked to follow when listing digital
asset derivatives. These included enhanced market surveillance,
closer coordination with the CFTC, reporting obligations, risk
management and outreach to members and market participants. That
advisory was withdrawn in its entirety, with the CFTC staff citing
its increased experience with digital asset derivatives and that
the digital asset industry has increased in market growth and
maturity.
The second advisory the
CFTC staff withdrew was Staff Advisory No. 23-07, Review of
Risks Associated with Expansion of DCO Clearing of Digital
Assets, issued on May 30, 2023. It stated that CFTC staff
would focus on the heightened risks of digital asset derivatives to
system safeguards, fiscal settlement procedures and conflicts of
interest.
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