Crypto Advocates Score Big as CFTC Drops Digital Asset Derivatives Directive

Crypto advocates scored big as the CFTC scrapped a directive singling out digital asset derivatives, easing scrutiny and marking a sharp split among U.S. regulators.

The Commodity Futures Trading Commission (CFTC) has scrapped a directive that would have singled out digital asset derivatives for heightened regulatory scrutiny, crypto news outlet TokenPost reported March 28.

The Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission (CFTC) has determined to withdraw Staff Advisory No. 23-07, the firm announced. The decision to pull the advisory, which was originally published on May 30, 2023, is effective immediately.

The advisory, originally released May 30, 2023, signaled that the Division of Clearing and Risk (DCR) would be placing greater emphasis on specific types of activities and risks as derivatives clearing organizations (DCOs) expanded into digital asset markets.

However, the CFTC said that the staff determined to withdraw the advisory "to ensure that it does not suggest that its regulatory treatment of digital asset derivatives will vary from its treatment of other products." As stated in the accompanying withdrawal letter, the DCR will continue to "closely examine applications and filings by DCOs to ensure they are compliant with the applicable statutory and regulatory framework."

The move comes after the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) also rescinded prior guidance. The FDIC previously required banks to obtain regulatory approval before engaging in crypto-related activities, while the OCC had issued guidance on national bank and federal savings association activities in the crypto space.

The actions by the U.S. financial regulators mark a shift in stance towards crypto, with the regulators now seeking to reduce barriers and encourage responsible innovation in the digital asset industry.

The CFTC said it remains committed to maintaining robust standards for clearing systems and supporting "safe and sound, orderly, and fairly competitive clearing systems through consistent regulation."

The CFTC said it will continue to provide guidance to DCOs and applicants as needed to ensure compliance with the federal securities laws.