By George Ward
The U.S. National Futures (NF) Association recently made a formal statement outlining its intentions regarding cryptocurrency regulations. The agency stated that due to the lack of established cryptocurrency rules, it is formulating standards for members involved in virtual asset commodities.
The NFA And Its Objectives
As designated by the CFTC (Commission for Commodity Futures Trading), NFA is an accredited futures association and the industry-wide self-regulating company for the United States derivatives market. Its objective is to uphold the derivatives markets’ integrity, secure the interests of investors, and ensure that Members fulfill their regulatory obligation.
The agency’s official statement regarding the new regulation indicated that over 100 members are engaged with virtual assets. The report also noted that the new rule would become effective on the 31st of May, approximately the next two months.
The NFA’s authority to regulate the derivatives market allows it to enforce standards on members, with penalties such as punishments and fines. The upcoming rule would expand this authority to encompass the cryptocurrency sector more explicitly.
The compliance regulation only applies to Ether (ETH) and Bitcoin (BTC) transactions. Nevertheless, it authorizes the NFA to discipline members and take corrective measures to safeguard the public against fraudulent or other misconduct concerning their virtual asset commodity affairs by their members.
The newly introduced compliance regulation requires members to conduct rigorous self-examination of their activities. It also stipulates that members should implement suitable supervisory procedures and policies when engaging in spot cryptocurrency commodity activities.
The Role Of The CFTC
It is important to note that while the CFTC supervises the National Futures Association and the broader industry, uncertainties persist regarding the scope of its jurisdiction over virtual assets. In the ongoing regulatory dispute between the US CFTC and SEC, legislators have repeatedly attempted to confer unambiguous powers upon the CFTC concerning the spot market and cryptocurrency commodities.
However, these proposed bills have yet to yield any outcomes. Per a recent statement posted on the CFTC’s website, CFTC Commissioner Caroline Pham stated that the new regulations are designed to safeguard customer interests and provide the NFA with sufficient authority to monitor the risks affiliated with spot trading of ETH and BTC.
The new rule’s primary objective is to safeguard consumers, according to the CFTC. However, it is noteworthy how rapidly the CFTC asserts its dominion over ETH and BTC through the NFA.
Over the past few weeks, the CFTC and SEC have frequently engaged in indirect oral disagreements. In May of last year, CFTC Chairman— Rostin Behnam expressed his opinion that ETH and BTC were commodities that should be categorized beneath CFTC’s purview.
Meanwhile, he reversed his stance, stating that only BTC was a commodity till at the beginning of this year.