The US Commodity Futures Trading Commission (CFTC) has made a significant move by withdrawing two pieces of crypto-related staff guidance, signaling a shift in the country’s regulatory approach towards the digital asset sector. The decisions to remove these advisories, effective immediately, indicate a more favorable stance towards the industry.
The withdrawn guidelines, which were put in place to provide guidance on virtual currency derivative product listings and the risks associated with the expansion of clearing digital assets, were seen as a way to closely monitor the market due to its perceived risks. However, with the recent decision to retract these guidelines, it suggests that the CFTC may now treat digital asset derivatives like any other product it oversees.
On March 28th, the CFTC announced the withdrawal of ‘CFTC Staff Advisory No. 18-14, Advisory with Respect to Virtual Currency Derivative Product Listings,’ citing increased staff experience with virtual currency derivative product listings and the growing maturity of the market as reasons for the decision. The advisory provided guidance to exchanges and clearinghouses on listing crypto-based derivative contracts, with a focus on market surveillance and coordination with the CFTC surveillance group.
Additionally, the CFTC Staff Advisory No. 23-07, Review of Risks Associated with Expansion of DCO Clearing of Digital Assets, was also withdrawn on the same day by the Division of Clearing and Risk (DCR). The move was made to ensure consistent regulatory treatment of digital asset derivatives compared to other products overseen by the CFTC. The advisory highlighted cyber and operational risks associated with digital assets and emphasized compliance with the Commodity Exchange Act.
In a separate development, the CFTC announced plans to host a CEO Forum to discuss the launch of its digital asset markets pilot program, with participants from leading companies in the crypto industry. The pilot program, proposed by Acting Chairman Pham in 2023, aims to provide regulatory clarity for the crypto industry through a US regulatory sandbox.
The withdrawal of these staff advisories comes at a time when the CFTC is taking steps to engage with the crypto industry and explore innovative solutions for market participants. With the launch of the first US CFTC-regulated XRP futures product by Bitnomial and the release of recommendations by the Digital Asset Markets Subcommittee, the regulatory landscape for digital assets continues to evolve.
Overall, the CFTC’s decision to withdraw these guidelines signals a shift towards a more collaborative and inclusive approach to regulating the digital asset sector, reflecting the growing maturity and acceptance of cryptocurrencies in the mainstream financial market.