The US Commodities and Futures Trading Commission (CFTC) has issued a warning about the risks associated with the clearing of digital assets. The CFTC’s Division of Clearing and Risk (DCR) has noticed derivatives clearing organizations (DCOs) and applicants expanding their offerings related to digital assets. The DCR has instructed DCOs to identify and manage the risks associated with these clearing activities.
Heightened Risks
The CFTC’s Division of Clearing and Risk has expressed concern about the risks involved in clearing digital assets, including cybersecurity requirements, conflict of interest, and the physical delivery of digital assets. It has instructed DCOs to focus on these areas and manage the risks associated with them.
New Rulemaking
CFTC Commissioner Kristin Johnson has suggested that the warning should lead to new rulemaking. She has said that the CFTC needs to begin a rulemaking process around the risks connected to “crypto clearing activities,” warning that crypto-commodity derivatives clearing models could escape regulation unless the CFTC introduces parallel regulation similar to that in other markets. If such regulations are not applied, regular investors could be exposed to high-risk platforms with few customer protections, Johnson warned.
Regulating Cryptocurrency Commodities
The CFTC has made it clear that it does not intend to regulate all crypto markets. However, it could expand its authority over cryptocurrency. CFTC Chairman Rostin Benham recently said that the CFTC intends to regulate cryptocurrency commodities as opposed to cash markets.
Managing the Risks
The CFTC’s warning highlights the need for DCOs and applicants to manage the risks associated with clearing digital assets. To ensure the safety of regular investors and protect them from high-risk platforms with few customer protections, the CFTC has instructed DCOs to identify and manage the risks associated with clearing digital assets.
The CFTC’s warning about the risks related to the clearing of digital assets highlights the need for DCOs and applicants to manage these risks. The CFTC has instructed DCOs to identify and manage the risks associated with clearing digital assets, including cybersecurity requirements, conflict of interest, and the physical delivery of digital assets. The warning has raised concerns about the need for new rulemaking to regulate crypto-commodity derivatives clearing models and ensure that regular investors are protected from high-risk platforms. While the CFTC does not intend to regulate all crypto markets, it is clear that it will regulate cryptocurrency commodities in the future.