The Commodity Futures Trading Commission (CFTC) has scrapped an old advisory that made it tough to list new cryptocurrency derivatives. This means it’s now easier for companies to offer these financial products.
What’s a Crypto Derivative?
A crypto derivative is basically a financial instrument whose value is tied to a cryptocurrency’s price. You can bet on the price going up or down without actually owning the cryptocurrency itself.
Why the Change?
Back in 2018, the CFTC issued an advisory that set strict rules for listing new crypto derivatives. They were worried about the risks in the still-new crypto market. The advisory focused on things like:
- Increased market surveillance: Keeping a close eye on trading activity.
- Working with the CFTC: Close communication with regulators.
- Reporting by large traders: Tracking big players in the market.
- Reaching out to stakeholders: Getting input from various groups.
- Risk management by clearing organizations: Ensuring safety and stability.
But now, the CFTC says things have changed. They’ve gained more experience with crypto derivatives, and the market has matured. They feel the old advisory is no longer necessary. The agency believes the market is better equipped to handle these products without the extra regulatory hurdles.
What This Means
This move is expected to make it easier for companies to offer crypto derivatives to investors. It removes a significant regulatory obstacle and could lead to more choices in the crypto derivatives market.
Disclaimer: This information is for general knowledge only and isn’t financial advice. Always do your own research before investing in cryptocurrencies or any other high-risk assets./p>
