CFTC Removes Staff Advisories Targeting Extra Scrutiny of Crypto Derivatives

YEREVAN (CoinChapter.com) — The US Commodity Futures Trading Commission (CFTC) has removed Staff Advisory No. 23-07 and No. 18-14

The US Commodity Futures Trading Commission (CFTC) has removed two Staff Advisories that had focused extra scrutiny on crypto derivatives, including risks in clearing and listing these products.

Specifically, the agency’s Division of Clearing and Risk (DCR) has withdrawn Staff Advisory No. 23-07 and No. 18-14.

Both directives were written to provide guidance to Derivatives Clearing Organizations (DCOs) operating in the US financial system. Staff Advisory 23-07, issued in May 2023, was titled "Digital Assets in a Clearing House Context" and outlined the risks tied to clearing digital assets.

Meanwhile, Staff Advisory 18-14, issued in July 2018, was titled "Virtual Currency Derivatives or Products" and targeted virtual currency derivatives, calling for caution when listing them. These documents signaled tighter controls for crypto products compared to other assets.

In a formal withdrawal letter, the DCR said the guidance was no longer needed and could be interpreted as unequal regulatory treatment.

“The DCR is mindful that, in the aggregate, the Advisories may be read to impose a disparate regulatory standard on digital asset derivatives, whereas the same risk management principles apply to all derivatives contracts, regardless of the underlying asset, such as ETH or other digital assets, or TradFi instruments,” the letter read.

CFTC Pushes for Regulatory Consistency Across Assets

The removal of these directives reflects a shift toward regulatory consistency. As the CFTC explained, its rules for digital asset derivatives will 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Even though the directives were withdrawn, the CFTC instructed DCOs to continue applying risk assessments that take into account the specific risks of digital assets. The agency added that proper oversight would still be required.

“The DCR will continue to monitor DCO activities closely to ensure compliance with the Commission’s regulations and to assess whether additional guidance is appropriate,” the letter concluded.

The CFTC’s decision may also 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 removed the perception that crypto markets face different standards. This step may improve participation and liquidity while keeping risk controls in place through DCOs.

However, 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.

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 also been testing and approving new frameworks for managing risk in the context of crypto activity. Both the OCC and FDIC require that digital asset activity follow strict oversight practices already used in traditional banking.

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