The National Futures Association (NFA), the United States’ self-regulatory organization for derivatives markets, has recently set new compliance rules for its members to address fraud and misconduct in digital asset commodities. This rule, modelled after similar NFA regulations for exchange traded futures and swaps transaction and retail foreign exchange, comes into effect on May 31, 2021 and will initially apply only to Bitcoin (BTC) and Ether (ETH).

CFTC commissioner Caroline Pham applauded the move and noted that, in the future, the NFA may extend the rule to include other digital asset commodities. She drew a comparison between the NFA’s antifraud regulations for forex and the lack of regulations for digital assets and highlighted the importance of starting with what works in order to extend regulatory frameworks over digital asset commodity markets.

Before this new rule, the NFA only imposed disclosure requirements on its members engaging in spot digital asset commodity activities with digital assets. Now, members will be subject to guidance on fraud, principles of trade and employee supervision. This is to ensure that the self-regulatory organization has a way to address misconduct and fraud among its members.

Overall, this news demonstrates the significance of self-regulatory organizations such as the NFA in providing an extra layer of security for digital asset markets. As Pham highlighted, “in order for the U.S. to remain competitive in the global digital asset market, it is important that we are also competitive in regulatory requirements and safety measures.” The rule serves as an extra security layer for digital asset investors and may lead to greater regulation and trust in the digital asset marketplace.



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