Wall Street’s crypto cousins are apparently growing up, as the Commodity Futures Trading Commission (CFTC) decided they no longer need special supervision.
In a move signaling increasing maturity in the digital asset space, the CFTC’s Division of Clearing and Risk (DCR) has withdrawn two staff advisories previously applied specifically to the crypto industry. Announced via two letters released today, the withdrawals suggest that crypto derivatives are stepping out of a phase of extra regulatory caution.
Staff Advisory No. 18-14, concerning Virtual Currency Derivative Product Listing and dating back to May 2018, has been deemed unnecessary. Initially, this advisory highlighted areas like enhanced market surveillance and risk management for crypto derivatives, considering the sector “emerging.” However, the DCR now states that accumulated staff experience and a more mature crypto sector mean the standard procedures within the Commodity Exchange Act (CEA) suffice.
Likewise, Staff Advisory No. 23-07, issued in May 2023 amid rising interest in digital assets, is also now withdrawn. This more recent advisory had emphasized risk assessments for crypto derivatives, including conflict of interest and system safeguards. The CFTC now views these additional layers as redundant, clarifying that they aim to avoid imposing stricter standards on crypto derivatives compared to other products.
“DCR is withdrawing the Advisory to ensure that it does not suggest that its regulatory treatment of digital asset derivatives will vary from its treatment of other products,” the division stated, emphasizing equal regulatory footing. The DCR also affirmed its commitment to ongoing market oversight and supervision of clearing activities under the existing CEA guidelines.
This regulatory recalibration from the CFTC mirrors a broader trend under the Trump administration towards a more accommodating stance on crypto. Recent months have seen the Securities and Exchange Commission (SEC) easing up on crypto enforcement actions and banking regulators reversing restrictive crypto policies. Despite this shifting regulatory landscape, the crypto market itself continues to face challenges, with leading cryptocurrencies like Bitcoin and Ether experiencing significant year-to-date declines.