The regulatory authority for Futures Commission Merchants (FCM) has yesterday issued fresh guidelines. Also said that it is aware of its responsibility and commitment towards FCMs and customers.
Commodity Futures Trading Commission (CFTC), which also looks after the use of cryptocurrencies for FCM, has issued a fresh advisory. In the advisory CFTC has clarified certain things and one of them includes guidance on the use of cryptocurrencies for FCMs.
FCMs have been directed that when they receive payments in digital currencies, then how they can put these funds in segregated accounts. Further guidance was issued on how FCMs can look after digital funds efficiently once funds are put in segregated accounts.
The issuance of advisory was confirmed by CFTC in its press release. As per the news, the Division of Swap Dealer and Intermediary Oversight within CFTC officially announced the advisory.
Department said that being an integral part of the system, FCMs have been advised to re-formulate their approach towards customers. FCMs have been foretold how they should report and hold different crypto assets of customers for swaps and futures contracts.
In the press release, the regulator has urged FCMs to abide by the advisory. It said that if the advisory is followed in letter and spirit then risks for managing customers’ funds will be greatly reduced. The advisory also contains the best industry practices for FCMs. In particular, FCMs have been advised to adopt a cautious approach while dealing with digital assets belonging to customers.
However, what the advisory does not cover is pertaining to the custody of the digital assets of foreign FCMs and customers. This is so because CFTC has limited jurisdiction and can only direct local FCMs and customers. Its authority does not cover foreign FCMs and customers.
After the press release, another statement was issued by the Division Director of CFTC. Joshua B. Sterling stated in his statement that CFTC is fully aware of its responsibilities towards FCMs and customers. He said further that CFTC is committed to promoting a culture where fintech innovation is encouraged and new products are introduced.
As regards derivatives relating to digital assets, CFTC said that it is working tirelessly for developing a holistic framework for that.