CFTC release Guidance for Firms Issuing Cryptocurrency Derivatives

The US Commodity Futures Trading Commission (CFTC) on Monday released an advisory to clearinghouses and exchanges for listing virtual currency derivative products. The guidance was jointly issued by the CTFC’s Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR).

According to the press statement, the advisory covers five major areas of interest when listing a product. They include enhanced market surveillance, risk management and governance, close coordination with CFTC staff, large trader reporting, and outreach to member and market participants.

In his statement concerning the guidance, the CFTC’s commissioner Rostin Behnam said that the advisory was “another step in providing the public with greater transparency into this process.” He further noted that “while this staff advisory clarifies expectations, it does not equate a change to the regulatory process.”

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The DMO director, Air Zaidi said that the agency was committed to providing regulatory clarity as much as possible. According to him, “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.”

In a similar remark, DCR Director Brian Bussey said that CFTC through the information was seeking to help market participants better manage risks associated with cryptocurrency-related products. He further emphasized the need for market participants to adhere to government regulations when launching their products.

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Last week, Chicago Mercantile Exchange (CME) launched a real-time ethereum price index in partnership with London-based Crypto Facilities which launched the first regulated ethereum futures contracts earlier this month. This sparked rumors that CME, who introduced bitcoin futures in December may be planning ethereum futures issues.

In this light, CTFC’s advisory will help exchanges and clearinghouses keep pace with the unique challenges of emerging virtual currency derivatives.


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