CFTC, the US top ranking derivative regulator has released a guidance on exchanges and clearinghouses to list their virtual currencies. According to the advisory statement published on May 21, 2018, aiming at providing clarity for exchange and clearing houses.
According to the CFTC press release issued on Monday, May 21st, 2018, US Commodity Futures Trading Commission (CFTC), aims at providing transparency for exchanges and clearing houses.
CFTC Issues Rules on Crypto Derivatives
The staff advisory that provides exchanges and clearinghouse for listing crypt products was jointly issued by Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR).
The DMO director, Amir Zaidi stated that,
“The CFTC staff is committed to providing regulatory clarity as much as possible. As the virtual currency market continues to evolve, CFTC staff will seek to provide additional guidance to help market participants keep pace with innovation while complying with CFTC regulations”.
Particularly, it was focused on specified areas involving listing crypto derivatives. On the other hand, it also includes, synchronization with CFTC staff, market observations, trader reporting and DCO risk management and governance.
The DCR director, Brian Bussey also stated:
“CFTC staff is providing this information, in part, to aid market participants in their efforts to design risk management programs. However, that address the new risks imposed by virtual currency products. In addition, the guidance ensures that market participants follow appropriate governance processes. Along with respect to the launch of these products”.
Further, at the NASAA conference, the CFTC chairman, Christopher Giancarlo spoke about the guidance for crypto derivatives. He mentioned that;
“CFTC staff advisory […] reflect[s] CFTC staff’s current thinking based on our growing experience with virtual currency derivatives. As new products are brought forth, staff will reevaluate and revisit the advisory. As necessary, to address any new and emerging issues”.
Additionally, the Chief Legal Officer and President at Blockchain.com, the crypto wallet service, tweeted a CFTC’s joint statement thread. He pointed that, “CFTC “keeps discretion as to what threshold constitutes a Large Trader in the crypto context. [It will be] interesting to see where that leads”.
The SEC’s and CFTC’s Earlier Guidelines
Earlier, CFTC was allowing its employees of to invest in cryptocurrencies but under specific guidelines. For instance, they are not allowed to take advantage of insider information sourced from their jobs. Additionally, they are not to buy on margin.
The Securities and Exchange Commission also allows its workers to invest in digital currencies, with some exceptions similar to the CFTC. However, the SEC has less responsibility for overseeing the crypto markets. In comparison, employees of the Securities and Exchange Commission can also trade in cryptocurrencies under similar conditions.
However, SEC has limited jurisdiction in cryptocurrencies with a special focus on ICOs at the moment. SEC ‘s ethics allow employees to indulge in an ICO seven days after the ICO.
The NASAA on May 1st launched the ‘Operation Cryptosweep’, the enforcement action including entire US states and securities agencies in Canada and about 70 investigations and pending 35 enforcement actions.