CFTC officials publish new crypto advisory for futures commission merchants
October 21, 2020, 6:18PM EDT
1 min read
The Commodity Futures Trading Commission (CFTC)'s Division of Swap Dealer and Intermediary Oversight published new guidance late Wednesday "regarding the holding of virtual currency in segregated accounts" by futures commission merchants, or FCMs.
"The advisory provides guidance to FCMs on how to hold and report certain deposited virtual currency from customers in connection with physically-delivered futures contracts or swaps," the agency said in a statement. An FCM is a business or entity that accepts or solicits orders to buy or sell commodities for futures delivery, per the agency's site.
"The advisory also provides guidance that FCMs should follow when designing and maintaining risk management programs concerning the acceptance of virtual currencies as customer funds," the announcement post continued.
According to the staff letter published alongside the announcement, the CFTC noted that "the Division has determined that receiving virtual currency from a customer and holding that currency as segregated funds creates additional risks for the other customers in the same origin."
"Specifically, virtual currencies present a degree of custodian risk that is beyond what is currently present with depositories, such as banks and trust companies," the letter continued, which outlined 10 areas for FCMs.