The CFTC Streamlines Crypto Regulation by Withdrawing Staff Guidance
The U.S. Commodity Futures Trading Commission (CFTC) made a significant move on Friday by withdrawing two pieces of crypto-related staff guidance, signaling a streamlined approach to crypto regulation.
Rescinded Advisories
The first advisory to be rescinded was Staff Advisory No. 18-14, which provided guidelines for virtual currency derivative product listings. Originally published in May 2018, the advisory outlined requirements for reporting firms, including maintaining close coordination with the CFTC surveillance group and establishing a large trader reporting threshold. The CFTC stated that the guidance was no longer necessary due to additional staff experience and increasing market growth.
The second advisory, Staff Advisory No. 23-07, focused on the risks associated with the expansion of DCO clearing of digital assets. This guidance was withdrawn to ensure fair treatment of crypto-related derivatives and their issuers, aligning them with other products regulated by the CFTC.
Rapid Transformation
While the SEC has garnered attention for its regulatory overhaul under Acting Chair Mark Uyeda, the CFTC is also undergoing a transformation. Acting Chair Caroline Pham’s plan to “get back to the basics” has led to the withdrawal of crypto-related guidance and an overhaul of the agency’s enforcement division.
Industry Response
Liz Davis, a partner at Davis Wright Tremaine LLP and former chief trial attorney in the CFTC’s Division of Enforcement, sees the rescinded guidance as part of Pham’s approach to running the agency. Davis suggests that the changes may be linked to a larger restructuring effort within the CFTC, potentially driven by ongoing reorganization efforts.
Overall, the CFTC’s withdrawal of crypto-related guidance reflects a broader shift towards simplification and efficiency in its regulatory strategy.