U.S. Commodity Futures and Trading Commission Issues Advisory For Cryptocurrency Businesses
The Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) released an advisory for exchanges and clearinghouses registered with the CFTC specific guidelines for listing cryptocurrency derivative products. The Commodity Futures Trading Commission (CFTC) works towards protecting consumers from fraud, manipulation and illegal practices about derivatives and similar products as per Commodity Exchange Act. To ensure integrity in the market, CFTC regulates the derivative market for malpractices. It also works for mitigating the risk associated with futures and swaps.
Division of Market Oversight Director Amir Zaidi reiterated that CFTC staff is dedicated to ensuring clarity in regulation to the maximum possible extent. He acknowledged the fast-evolving nature of the cryptocurrency market and emphasized that CFTC staff would seek to offer extra help to all market players and stakeholders to keep the same pace as innovation which is driving these markets.
“CFTC staff is providing this information, in part, to aid market participants in their efforts to design risk management programs that address the new risks imposed by virtual currency products,” DCR Director Brian Bussey stated. “In addition, the guidance is designed to help ensure that market participants follow appropriate governance processes with respect to the launch of these products.”
The advisory highlighted some core points for listing a virtual currency derivative product. Superior market surveillance and better coordination with CFTC staff were pointed out. More substantial trading reporting and Derivatives Clearing Organization risk management and governance were key focus areas of the advisory.
The CFTC wielded its authority on Bitcoins and other cryptocurrencies in the year 2015 by bringing all digital currencies under the ambit of Commodity Exchange Act. The CFTC has been ruthless on the unregistered futures exchanges and has brought in strict laws against prohibitory trade practices. The advisory released by CFTC intends to ensure sufficient regulation of the market without stifling innovation and out of the box thinking. It, however, does not change the current rules regarding cryptocurrencies.
Image via CFTC Twitter Page
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