Home

CFTC Ends 2 Crypto Advisories

March 28, 2025

On March 28, 2025, the CFTC withdrew two key advisories: CFTC Staff Advisory No. 18-14, issued on May 21, 2018, titled “Advisory with Respect to Virtual Currency Derivative Product Listings,” and CFTC Staff Advisory No. 23-07, issued on May 30, 2023, titled “Review of Risks Associated with Expansion of DCO Clearing of Digital Assets” (CFTC Press Release 9059-25 and CFTC Press Release 9060-25). These actions were detailed in letters from the CFTC’s Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR), dated March 27 and March 28, 2025, respectively (CFTC Letter No. 25-07 and CFTC Staff Letter No. 25-08).

The withdrawal of CFTC Staff Advisory No. 18-14 was driven by the significant growth and maturity of the virtual currency derivatives market since 2018. For example, average daily volumes for Bitcoin futures have increased by over 300%, and aggregate open interest has grown by more than 800% (See CFTC Letter No. 25-07). This growth led the CFTC to conclude that the specific guidance in the 2018 advisory, which focused on enhanced market surveillance, coordination, reporting, risk management, and outreach, was no longer necessary. The CFTC emphasized that existing regulatory frameworks under the Commodity Exchange Act (CEA) and CFTC regulations are sufficient to oversee these products.

Similarly, CFTC Staff Advisory No. 23-07, which addressed risks associated with Derivatives Clearing Organizations (DCOs) clearing digital assets, was withdrawn to ensure consistent regulatory treatment. The DCR highlighted that digital asset derivatives should not face different scrutiny compared to other derivatives, focusing on uniform oversight of clearing activities and compliance with CEA and Commission regulations (See CFTC Staff Letter No. 25-08). The CFTC encouraged ongoing communication with market participants, signaling continued engagement with the sector.

The withdrawal of these advisories has several implications for the cryptocurrency industry, particularly for those involved in digital asset derivatives:

1. Normalization of Regulatory Treatment: By treating digital asset derivatives similarly to traditional derivatives, the CFTC acknowledges their market maturity. This normalization could foster greater institutional participation, as it aligns with familiar regulatory standards. For instance, the removal of heightened review processes may reduce compliance burdens, potentially accelerating the listing and clearing of new products.
2. Regulatory Clarity and Efficiency: A recent National Law Review article suggests that this move provides clarity, eliminating the need for additional scrutiny specific to digital assets. This could streamline operations for DCMs, SEFs, and DCOs, reducing costs and time to market, which is crucial for innovation in the crypto space.
3. Potential for Expanded Jurisdiction: There is ongoing debate about whether this regulatory shift hints at future CFTC involvement in digital asset spot markets. Currently, the CFTC’s jurisdiction is limited to derivatives, but some sources note that this could signal openness to regulating spot transactions if Congress grants authority. This possibility is controversial, as it could expand regulatory oversight but also raise concerns about innovation stifling.
4. Continued Rigorous Oversight: Despite the withdrawals, the CFTC maintains strict oversight. Existing requirements for market surveillance, risk management, and reporting remain fully enforceable. For example, the Large Trader Reporting System, which mandates daily position reports for significant trader positions, continues to apply (See CFTC Letter No. 25-07). This ensures market integrity and transparency, critical for maintaining trust in digital asset derivatives.

From a legal perspective, these developments are significant for cryptocurrency stakeholders. The withdrawal does not imply deregulation but rather a recalibration of focus, aligning digital assets with broader financial regulations. Market participants should review their compliance frameworks to ensure alignment with CFTC expectations, particularly regarding market oversight and risk management. The emphasis on consistent treatment suggests integration into the financial regulatory landscape, potentially enhancing legitimacy and adoption. Strategically, firms should remain engaged with regulatory developments, advocating for balanced rules that support innovation while protecting market integrity. The potential for future spot market regulation underscores the importance of staying informed, as this could reshape the regulatory environment for cryptocurrencies.

The CFTC’s withdrawal of CFTC Staff Advisory No. 18-14 and CFTC Staff Advisory No. 23-07 reflects the maturation of the digital asset derivatives market and the regulator’s confidence in existing frameworks. This shift normalizes treatment, streamlines compliance, and signals potential future regulatory expansions. For cryptocurrency-sophisticated audiences, it is a reminder to stay vigilant, ensuring compliance while leveraging opportunities for innovation. The debate over spot market regulation adds complexity, but for now, the focus remains on derivatives, with robust oversight intact.

The article “CFTC Ends 2 Crypto Advisories” first appeared on DigitalAsset.Law on March 28, 2025.

Return to Home