CFTC Issues Guidance for Firms Offering Cryptocurrency Derivatives

The U.S. Commodity Futures Trading Commission has released new guidance for companies issuing cryptocurrency derivatives products.

May 22, 2018 at 2:54 p.m. UTC
Updated Sep 13, 2021 at 7:58 a.m. UTC

The U.S. Commodity Futures Trading Commission (CFTC) has released new guidance for clearinghouses and exchanges planning to list cryptocurrency-related derivatives products.

Published Monday, the joint advisory from the agency's Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) provides companies with "regulatory clarity" around such products, a press release states.

The advisory addresses areas including market surveillance, large trader reporting, risk management and governance, and coordination with CFTC members, describing them as "key areas that require particular attention."

DCR director Brian Bussey said the new guidance would help market participants to develop risk management programs specifically for cryptocurrency products, according to the release.

Bussey continued:

"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 guidance notably comes a week after CME Group announced it was launching an ether reference rate and real-time ethereum price index in partnership with digital asset trading service Crypto Facilities, as reported by CoinDesk.

U.K.-based Crypto Facilities, which already provides CME Group with bitcoin reference indices, launched the first regulated ethereum futures contracts earlier this month. While CME Group has not confirmed it is launching ether futures, the new reference rates hint at the possibility.

And, just last week at at CoinDesk's Consensus 2018 conference, CFTC enforcement director James McDonald told an audience that the agency is trying to avoid "hindering innovation" when it comes to regulating the cryptocurrency and derivatives markets.

"Our mission is to foster financially sound markets, and we understand as a regulator that requires a certain amount of [flexibility] in our approach," he said.

CFTC logo image via Shutterstock

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