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Jul 13, 2020
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US Derivatives Regulator to Make Digital Assets Regulation a Strategic Goal

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The US Commodities Futures Trading Commission (CFTC) has made cryptocurrency regulation the strategic goal for the next four years.

The CFTC, which is the world’s premier derivatives regulator, announced yesterday the finalization of the agency’s 2020-2024 Strategic Plan, which makes digital assets regulation one of its top priorities. The strategy has already been unanimously approved this May and went through the 30-days comment period, which ended in June.

According to the press release, the strategic plan calls on the CFTC to focus its work on five strategic goals, that respectively include encouraging innovation and enhancing the regulatory experience to digital assets. As stated in the document:

Financial markets quickly adopt emerging technologies, and our derivatives markets have experienced an amazing digital transformation that presents opportunities as well as risks.

The Commission further admitted that regulatory institutions have to monitor and even take the lead in strengthening “responsible innovations” that are playing an important role in the market and citizens. The CFTC further set the provision of promoting innovation by avoiding rules and approaches that reflect long-gone business practices.

Moreover, the Commission recognized digital assets as the “21st-century commodities”. The plan further stated the strategic objectives, that include addressing the risks and opportunities from such kinds of commodities. CFTC plans to implement the objectives by developing an innovation promotion framework:

We will develop a holistic framework to promote responsible innovation in digital assets.

Despite the digital asset regulation, the four-year strategic plan also includes goals like strengthening the resilience and viability of derivatives markets, regulating them to promote interests for all Americans, encouraging innovations, preventing market manipulation, and strengthening deterrents to potential bad actors as well as improving CFTC operational effectiveness.

According to CFTC Chairman Heath P. Tarbert, the strategic plan which was finally approved unitedly gives the Commission an additional focus to move forward not for the next four years, but “perhaps for the next ten or beyond.”

The Crypto derivatives market is growing

Cryptocurrency derivatives are gaining market share within the rapidly growing cryptocurrency space. The derivative financial instruments like Bitcoin options and futures contracts attract huge institutional interest though with trading volumes beating the all-time highs.

Moreover, traditional banks are turning towards cryptocurrencies and adding crypto trading and custody services as an option. Meanwhile, the large crypto investors are taking solid amounts of digital coins off the market. As was previously reported, the crypto management company Grayscale Bitcoin Trust (GBTC) acquired around one-third of newly mined Bitcoins since its third halving. The vast majority of Bitcoins as well are currently held as a long-term investment.

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