CFTC Says Digital Asset Derivatives Will Get Same Regulatory Treatment as Other Products
The Commodity Futures Trading Commission withdrew two advisories: one on the review of risks related to clearing digital assets, and the other on virtual currency derivative product listings.
The CFTC’s Division of Clearing and Risk announced in CFTC Letter No. 25-08 that it is withdrawing CFTC Staff Advisory No. 23-07, “Review of Risks Associated With Expansion of DCO Clearing of Digital Assets,” effective immediately, the agency said in a Friday (March 28) press release.
The DCR withdrew the May 2023 advisory to ensure that it does not suggest that its regulatory treatment of digital asset derivatives will differ from that of other products, according to the release.
In its Friday letter, the DCR said the advisory that is now withdrawn stated that in connection with new clearing activities related to digital assets, derivatives clearing organization (DCO) registrants and applicants should expect DCR to emphasize “the potential risks and DCO core principles related to system safeguards, physical settlement procedures and conflicts of interest.”
“DCR conducts its supervision of clearing activities and oversight of compliance with the Commodity Exchange Act and commission regulations consistently, regardless of the specific commodity underlying relevant contracts,” the letter said. “This withdrawal will not impact DCR’s ability to oversee the financial integrity of cleared transactions and avoidance of systemic risk in the derivatives market, while promoting responsible innovation.”
In another letter released Friday, CFTC Letter No. 25-07, the CFTC’s Division of Market Oversight and DCR said they are withdrawing CFTC Staff Advisory No. 18-14, “Advisory With Respect to Virtual Currency Derivative Product Listings,” effective immediately, according to a second Friday press release.
“As stated in today’s withdrawal letter, DMO and DCR determined to withdraw the advisory given additional staff experience with virtual currency derivative product listings and increasing market growth and maturity,” the release said.
These changes came on the same day that the Federal Deposit Insurance Corp. provided new guidance saying that FDIC-supervised institutions can engage in cryptocurrency-related activities without receiving prior FDIC approval, provided they adequately manage the risks.
Previously, under guidance that the FDIC rescinded Friday, the agency required prior notification of crypto-related activities.
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