CFTC Withdraws Directives to Align Crypto Derivatives with Traditional Finance
The US Commodity Futures Trading Commission (CFTC) has removed two major directives that imposed additional scrutiny on crypto derivatives. This action aims to align digital asset regulations with traditional financial products, encouraging more institutional participation in the crypto market.
- The removed directives are Staff Advisory No. 23-07 and No. 18-14.
- Advisory 23-07 warned of risks related to clearing digital assets.
- Advisory 18-14 outlined the listing process for derivatives tied to virtual currencies.
- The CFTC will now treat digital asset derivatives similarly to other commodities.
- Risk assessments by derivatives clearing organizations (DCOs) are still required due to unique risks associated with digital assets.
This change reflects a broader effort to support innovation while maintaining oversight. Separately, the Office of the Comptroller of the Currency (OCC) has allowed US banks to provide crypto and stablecoin services without prior approval, stressing strong risk management. This indicates a split regulatory approach: one side advocates for equal treatment, while the other emphasizes safety.
The CFTC's move is significant for normalizing crypto within the financial system, potentially enhancing growth opportunities while ensuring necessary safeguards.