CFTC Removes Crypto Derivatives Oversight Rules in Policy Shake-Up

YEREVAN (CoinChapter.com) — The US Commodity Futures Trading Commission (CFTC) has removed Staff Advisory No. 23-07 and No. 18-14. Both directives had focused on extra scrutiny for crypto derivatives, including risks in clearing and listing these products.

Staff Advisory 23-07, issued in May 2023, outlined the risks tied to clearing digital assets. Staff Advisory 18-14 targeted virtual currency derivatives and called for caution when listing them. These documents had signaled tighter controls for crypto products compared to other assets.

In a formal withdrawal letter, the CFTC’s Division of Clearing and Risk (DCR) said the guidance was no longer necessary. It added that keeping them in place could suggest unequal regulatory treatment. The agency stated that all derivatives, including those based on Ethereum (ETH) or other digital assets, would now be treated like TradFi instruments.

CFTC Pushes for Regulatory Consistency Across Assets

The removal of these directives reflects a shift toward regulatory consistency. The CFTC said its rules for digital asset derivatives would now align with the standards already used for traditional financial products.

This move removes the regulatory separation that previously existed between crypto derivatives and TradFi contracts. It allows market participants to follow the same framework, regardless of asset type.

Even though the directives were withdrawn, the CFTC instructed Derivatives Clearing Organizations (DCOs) to continue applying risk assessments. These assessments should account for the specific risks of digital assets. The agency emphasized that proper oversight would still be required.

Institutional Participation in Crypto Derivatives May Expand

The CFTC decision may encourage more financial institutions to enter the crypto derivatives market. The updated framework now places crypto derivatives within the same regulatory system as other commodities.

By removing the earlier directives, the CFTC ended the perception that crypto markets face different standards. This step may improve participation and liquidity while keeping risk controls in place through DCOs.

The agency did not remove the need for due diligence. It stated that digital asset products still require custom risk approaches, even if they now fall under general derivative regulations.

CFTC Action Follows OCC and FDIC Oversight Framework

The policy change from the CFTC follows updates from other US financial regulators. Earlier this year, the Office of the Comptroller of the Currency (OCC) allowed US banks to offer crypto and stablecoin services without getting prior approval.

However, the OCC clarified that banks must maintain internal risk controls. Rodney E. Hood, Acting Comptroller of the Currency, said,

“The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones.”

The Federal Deposit Insurance Corporation (FDIC) has echoed this stance. Both the OCC and FDIC require that digital asset activity follow strict oversight practices already used in traditional banking.

While the CFTC removed crypto-specific scrutiny, it still expects detailed risk measures. These changes show an effort to balance open market participation with financial stability.