In the absence of formal crypto rules from U.S. government agencies, the National Futures Association (NFA) is setting up standards for its members that deal in digital assets commodities.
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The NFA – which as a so-called self-regulatory organization occupies a space between the federal government and industry – has more than 100 members involved in digital assets, the organization said in a statement on the new rule, which is set to go into effect on May 31. The NFA’s self-regulation of the derivatives industry allows it to impose standards on its members under penalty of fines and other punishment, and this rule extends that power more explicitly to the crypto sector.
The compliance rule – currently limited to involvement with bitcoin and ether – gives 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 the March 29 statement. It also requires members to supervise their activity closely and says that members involved in spot crypto commodity activity “must adopt and implement appropriate supervisory policies and procedures over these activities.”
The Commodity Futures Trading Commission (CFTC) oversees the NFA and the wider industry, though questions remain as to the extent of its authority over digital assets. A number of legislative efforts in the U.S. Congress have sought to give the CFTC undeniable powers over crypto commodities and the spot market, but the bills haven’t yet produced results.