The U.S. Commodity Futures Trading Commission (CFTC) has withdrawn key guidelines for strengthening oversight of digital asset derivatives.
Considering the Trump administration's pro-cryptocurrency stance, this decision indicates a favorable regulatory environment for digital assets in the United States.
CFTC Eases Supervision of Cryptocurrency Derivatives
The CFTC has withdrawn Staff Advisory 23-07 and 18-14 from the Division of Clearing and Risk (DCR).
The former was issued in May 2023, focusing on the risks of digital asset clearing. The latter targeted the listing of cryptocurrency derivatives.
At their establishment, both guidelines implied strict supervision of cryptocurrency products.
Now, they are deemed unnecessary and have been immediately revoked, promoting regulatory consistency for the commodity regulatory agency.
This decision indicates a shift towards treating digital asset derivatives like traditional financial (TradFi) products such as ETH.
"As specified in today's withdrawal letter, DCR decided to withdraw the advisory to avoid implying that the regulatory treatment of digital asset derivatives would differ from other products," the CFTC explained.
This measure will eliminate the perceived differences between digital asset derivatives and traditional financial instruments.
It may also encourage financial institutions' participation in the digital asset derivatives market, increasing liquidity and market maturity.
Nevertheless, the advisory warned derivatives clearing organizations (DCO) to prepare risk assessments for the unique characteristics of digital products.
This suggests the CFTC's intention to maintain strong financial supervision while reflecting its commitment to innovation promotion.
This decision came weeks after the Office of the Comptroller of the Currency (OCC) allowed U.S. banks to provide cryptocurrency and stablecoin services without prior approval.
However, the OCC specified that banks must maintain robust risk management controls similar to those required for traditional banking operations.
"The OCC expects banks to apply the same robust risk management controls to new banking activities as they do to traditional activities," said Rodney E. Hood, Acting Comptroller of the Currency.
Therefore, the CFTC's move to remove regulatory bias towards cryptocurrency derivatives represents a key turning point in U.S. policy, with the CFTC seeking to eliminate distinctions between cryptocurrency derivatives and traditional financial instruments.
On the other hand, the FDIC and OCC want banks to maintain risk management controls similar to those needed for traditional banking operations, even when providing cryptocurrency and stablecoin services.
Nevertheless, these efforts reflect an increasing trend of U.S. financial regulatory agencies lowering barriers and promoting responsible innovation in the cryptocurrency industry.
