CFTC Publishes Advisory On Listing Cryptocurrency Derivatives

The United States Commodity Futures Trading Commission (CFTC) has issued an advisory for exchanges and clearinghouses providing guidance pertaining to the assessment and listing of cryptocurrency derivatives.

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CFTC Issues Advisory Regarding Cryptocurrency Derivatives

The CFTC’s Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) have issued a “joint staff advisory that gives exchanges and clearinghouses registered with the CFTC guidance for listing virtual currency derivative products.” In addition to providing guidance regarding “listing a derivative contract based on virtual currency,” the advisory “clarifies the CFTC staffs’ priorities and expectations in its review of new virtual currency derivatives to be listed.”

Amir Zaidi, the DMO director, stated that “The CFTC staff is committed to providing regulatory clarity as much as possible. As the virtual currency market continues to evolve, CFTC staff will seek to provide additional guidance to help market participants keep pace with innovation while complying with CFTC regulations.”

The advisory specifically outlines requirements pertaining to “Enhanced market surveillance,” “coordination with CFTC staff”, “Large trader reporting,” “Outreach to […] market participants,” and “risk management.”

Brian Bussey, the DCR director, said: “CFTC staff is providing this information, in part, to aid market participants in their efforts to design risk management programs that address the new risks imposed by virtual currency products. In addition, the guidance is designed to help ensure that market participants follow appropriate governance processes with respect to the launch of these products.”

CFTC Chairman Discusses Advisory at NASAA Conference

Christopher Giancarlo, the CFTC chairman, mentioned the guidance for cryptocurrency derivatives during a recent speech at the North American Securities Administrators Association (NASAA) conference.

Mr Giancarlo Mr. Giancarlo described the CFTC as having “been at the regulatory horizon on virtual assets,” and stated that the “CFTC staff advisory […] reflect[s] CFTC staff’s current thinking based on our growing experience with virtual currency derivatives,” adding that “As new products are brought forth, staff will reevaluate and revisit the advisory, as necessary, to address any new and emerging issues.”

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