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CFTC Issues Guidance on Digital Currencies for Futures Commission Merchants

The CFTC wants futures commission merchants to take care when dealing with customer's funds.

Oct 22, 2020 at 2:01 a.m. UTC
Updated Sep 14, 2021 at 10:22 a.m. UTC

The Commodity Futures Trading Commission (CFTC) has released an advisory to futures commission merchants (FCM) providing clarity on how to look after users' digital currencies in segregated accounts.

  • According to a Wednesday press release from the CFTC's Division of Swap Dealer and Intermediary Oversight, the advisory informs FCMs on how to hold and report certain digital assets held by customers in connection with physically delivered futures contracts or swaps.
  • A segregated account means customer funds are strictly separated from a company's money.
  • The CFTC noted that holding customer assets as segregated funds may let greater risks arise for the other customers under the same banner.
  • The financial watchdog's advisory also provides guidance on best practices FCMs should follow when they design and maintain risk management programs when dealing with digital assets as customer funds.
  • The advisory does not pertain to foreign FCMs' digital assets custody of customer's assets in relation to trading futures or options on futures.
  • CFTC Division Director Joshua B. Sterling said in a statement the commission is "committed to fostering responsible fintech innovation" as it works toward creating a "holistic framework for digital asset derivatives."

See the CFTC's guidance in full below:

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