The National Futures Association (NFA) has announced a new compliance rule for its members that deal with digital asset commodities, in the absence of formal crypto regulations from US government agencies. The NFA, a self-regulatory organization with over 100 members involved in digital assets, aims to impose standards on its members under penalty of fines and other punishments.
The new rule, set to go into effect on May 31, will give the NFA “the ability to discipline a member or take other action to protect the public if a member commits fraud or similar misconduct with respect to its spot digital asset commodity activities,” the group said in a statement. The rule is currently limited to involvement with bitcoin and ether.
The Commodity Futures Trading Commission (CFTC) oversees the NFA and the wider industry, but there are still questions about the extent of its authority over digital assets. Several legislative efforts in Congress have aimed to give the CFTC clear powers over crypto commodities and the spot market, but the bills haven’t produced any results yet.
Crypto regulations in the US
The new compliance rule is an example of using existing authority to ensure customer protections are in place, according to CFTC Commissioner Caroline Pham. She added that the rule will require NFA members and associates to explicitly disclose the risks associated with trading spot bitcoin and ether so that customers are fully informed before making any trading decisions.
The compliance rule also requires members to closely supervise their activity and adopt appropriate supervisory policies and procedures over their spot crypto commodity activities. This move comes amid rising concerns about the lack of regulation in the crypto industry and the potential for fraud and misconduct. The NFA’s self-regulation of the derivatives industry allows it to impose standards on its members, extending its power more explicitly to the crypto sector.
NFA compliance rules for the crypto industry to improve accountability
The NFA’s move to impose its own standards on its members is seen as a step towards greater accountability in the crypto industry. The lack of clear regulations has led to a patchwork of rules and guidelines, leaving investors vulnerable to scams and fraud. The NFA’s compliance rule addresses some of these concerns by providing a clear set of standards for its members to follow.
While the new compliance rule is limited to involvement with bitcoin and ether, it could pave the way for broader regulations in the crypto industry. The CFTC has been pushing for greater oversight of the industry, and the NFA’s move could be seen as a response to this pressure. The new rule is set to go into effect on May 31, giving NFA members and associates time to prepare for the new requirements.
