CFTC seeks funding for expanded crypto training in FY2023 budget

The Commodity Futures Trading Commission is requesting additional training resources to support the assessment of new digital assets in its most recent budget proposal.

The budget proposal, dated March 21, covers requests for the 2023 fiscal year. It highlights the risk landscape in crypto, pointing out that the number of derivatives clearing organizations (DCOs) utilizing digital innovations and exploring the use of digital assets is increasing.

DCOs need to be especially careful to employ effective data-breach security solutions given the use of brute force attacks, Distributed Denial of Service (DDoS) attacks launched from botnets and other compromised equipment, sophisticated social engineering efforts, and various other malware efforts and exploits, according to the CFTC.

Additionally, those using crypto are exposed to the extra risks that require assessment from the commodities watchdog, per the agency statement. 

"Each new digital asset operates differently and with its own specialized set of threat vectors which each carry its own unique set of risks that need to be identified, assessed and then examined," said the document. "The Division is requesting additional training resources in the area of loss prevention and resources to analyze and assess new digital assets."

A number of DCOs already clear physically-settled bitcoin contracts, and a number of other proposals with the Commission contain plans to clear other digital assets. The CFTC says this requires additional resources to identify risks and effectively communicate how DCOs are expected to mitigate them.

Already the Commission requires various audit reports from DCOs using digital assets, and as the use of crypto by clearing organizations expands, the CFTC says it will need workers who are effectively trained in examining risks related to crypto and assessing those audit reports.

"The Commission must have adequate resources to review reports being issued by consultants, resources for training purposes to learn about the new technologies to protect the digital currency, and must have the staffing resources, including travel dollars, to examine the DCO," said the report. "Resources for training are needed for the examiners in order to keep abreast of new digital assets that DCOs would like to clear, the accounting treatment for digital currencies, and new technologies used to defend against an intrusion."