Revolution in Crypto Derivatives Regulation
The Commodity Futures Trading Commission (CFTC) has made a groundbreaking decision to rescind two staff advisories that previously imposed distinct regulatory expectations on digital asset derivatives. This move signals a shift towards a more harmonized treatment of crypto-based financial instruments with traditional derivatives.
Immediate Removal of Previous Regulations
On March 28, the CFTC’s Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) jointly withdrew CFTC Staff Advisory No. 18-14 and Advisory No. 23-07. These advisories provided guidance on virtual currency derivative product listings and addressed risks associated with expanded digital asset clearing by derivatives clearing organizations (DCOs).
According to CFTC Press Release 9059-25, the removals are effective immediately. The agency stated that the withdrawal aligns its oversight practices with those applicable to traditional financial products, removing additional scrutiny that had previously distinguished digital asset derivatives.
Path Toward Regulatory Parity
The withdrawal of these advisories highlights the CFTC’s strategic move to eliminate regulatory disparities between digital assets and traditional financial instruments. Previously, exchanges listing crypto derivatives were required to provide heightened transparency and proactive risk assessments under Staff Advisory No. 18-14.
“The Advisory reflected ‘staff’s current thinking’ in 2018 ‘based on experience with virtual currency derivatives products to date.’”
Advisory No. 23-07, which raised concerns about systemic risks posed by digital assets, is also being rescinded. The removal of both documents removes language that had implied heightened regulatory concern specifically tied to the digital nature of these assets.
“Given additional staff experience in the intervening years, as well as increasing market growth and maturity, DMO and DCR believe the Virtual Currency Listing Advisory is no longer needed. Accordingly, DMO and DCR have determined to withdraw the Advisory, effective immediately.”
Impact on Market Participation and Institutional Engagement
By eliminating separate advisories, the CFTC is paving the way for greater institutional participation in crypto derivatives markets. This change is expected to reduce compliance uncertainty for firms seeking to offer or clear digital asset-based products.
The CFTC’s move addresses industry concerns about the lack of parity in regulatory treatment and aims to signal that digital asset derivatives will now be subject to the same regulatory review and risk protocols applied to traditional financial products.
While removing prescriptive directives, the CFTC emphasized that DCOs are still expected to conduct thorough risk assessments, especially given the volatility and unique custody mechanics of digital tokens. This approach aligns with the agency’s broader goal of maintaining prudent oversight while encouraging innovation.
This decision reflects broader regulatory shifts across US financial agencies, indicating a move towards integrating blockchain infrastructure and tokenized products into traditional financial markets.
As per CFTC Chair Rostin Behnam, the agency remains dedicated to “principles-based oversight” that balances innovation and market integrity. The scalability of this model across the digital asset landscape will depend on future inter-agency collaboration and legislative clarity.
