CFTC Determined To Prevent Emerging Risks In Cryptocurrency

Key Points:

• The CFTC’s Division of Clearing and Risk published a staff recommendation on the risks associated with growing digital asset clearing.
• In the future, the agency is expected to play a stronger role as an industry watchdog.

US Commodities Futures Trading Commission (CFTC) employees are encouraging corporations to be mindful of and aggressively prevent dangers from clearing digital asset transactions.

The CFTC’s Division of Clearing and Risk (DCR) issued the advisory on Tuesday, stating that it would place a special emphasis on emerging risks in cryptocurrency in response to an increase in the number of its supervised entities clearing such trades. These hazards include possible conflicts of interest, cyber-threat prevention, and how corporations manage the physical delivery of digital assets in transactions requiring delivery.

According to the agency:

“DCR expects DCOs and applicants to actively identify new, evolving, or unique risks and implement risk mitigation measures tailored to the risks that these products or clearing-structure changes may present.”

The derivatives regulator oversees crypto futures directly and has enforcement authority over fraud and manipulation of spot markets for trading non-security crypto assets.

It is anticipated to play a larger role as an industry watchdog in the future, but legislation to increase its jurisdiction has yet to pass through Congress. When such a regulator gives a public warning about particular behaviors, it is often followed by punishment in that field.

Meanwhile, the CFTC has already taken major enforcement actions against cryptocurrency companies, most recently against Binance’s global operations.

CFTC earlier authorized the Eurex FTSE bitcoin index futures, with trading for US-based investors commencing yesterday.

The trade started early on 17 April outside of the US. The contract was created in partnership with FTSE Russell and Digital Asset Research (DAR).

US players may now take advantage of expanded trading and hedging options. This includes increased access to more participants and liquidity pools during European, North American, and Asian business hours.

With this approval, Eurex becomes the first exchange in Europe to offer bitcoin index futures. The new futures contracts are traded in both euros and US dollars, have a contract multiplier equal to one Bitcoin (BTC), and settle in cash with no position limitations on expiration.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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