The agency’s antifraud regulations for ETFs, swap transactions, and retail foreign exchange offer a good example for the new norms of conduct.
New guidelines for members handling digital assets have been released by the Commodities Futures Trading Commission (CFTC) via the National Futures Association (NFA).
The CFTC has only granted delegation of authority to one Self Regulating Organization (SRO), the NFA, for the derivatives markets. It has “far over 100” members who participate in activities involving commodities of digital assets.
The derivatives market SRO claimed in a letter dated February 28 to CFTC Secretary Christopher Kirkpatrick that it lacked any means of dealing with fraud or improper behaviour by its members. The letter requested approval and was included with a proposal for additional regulations.
The plan was recently passed, and if it is put into practise, it will rule the members.
The new regulations are based on the NFA’s antifraud guidelines for retail foreign exchange, swap transactions, and exchange-traded futures (ETFs). It completes the specifications released in 2018.
In terms of its mandate, the NFA is on par with the Securities and Exchange Commission’s Financial Industry Regulatory Authority (FINRA) (SEC).Today, the NFA only imposes disclosure rules on members who use digital assets to participate in spot digital asset commodities activity. This is explained in great depth in one document. Conduct requirements are currently being added.
New NFA regulations signal CFTC power
According to reports, the new regulations will go into effect on May 31 and subject members to staff monitoring, counselling on fraud, and business ethics. Because only Bitcoin (BTC) and Ethereum (ETH) “have associated commodity interests confirmed by a registered business for listing under Part 40 of CFTC Regulations,” the regulations only apply to these digital assets.
Caroline Pham, commissioner of the CFTC, commented on the development and praised the new regulations in a statement. She stated:
Due to the requirement that businesses and individuals abide by NFA regulations in order to register with the NFA, this is an obvious illustration of how existing authorities can be used to ensure that there are customer protections in place.
Pham further mentioned that the NFA had the power to change the regulations in the future in order to include other types of digital asset commodities and not just BTC and ETH.
The CFTC official also stated that the NFA foreign exchange regulations come five years before or after the CFTC’s congressionally mandated authority to regulate that [foreign exchange] industry. She states, “I think it makes sense to extend our regulatory framework over spot digital asset commodities markets by starting with what we already have and what works.”