US to develop a comprehensive regulatory framework for digital assets

US to develop a comprehensive regulatory framework for digital assets

The regulatory body has released a report highlighting its five major goals for the next four years

The United States of America’s Commodity Futures Trading Commission (CFTC), the country’s primary regulator for derivatives, has announced it will develop a comprehensive framework to regulate and promote digital assets including cryptocurrency.

In its strategic plan for 2020 – 2024 released earlier this week, the CFTC has assured that it will develop a holistic framework to promote innovation in the digital assets space.

Cryptocurrency being an unregulated asset in most parts of the world, an effort towards developing a regulatory framework by a prominent government is an important milestone towards achieving recognition and legitimacy for digital assets.

The CFTC’s report outlines five key goals that the regulatory body seeks to achieve in the next four years. This includes strengthening the integrity of derivatives markets, improving regulating standards of the derivatives markets, encouraging innovation, taking strict action against defaulters and focusing on improving its operational effectiveness.

In its third strategic goal titled, “Encourage innovation and enhance the regulatory experience for market participants at home and abroad,” the CFTC explains that it will address the risks and opportunities arising from digital assets and “will develop a holistic framework to promote responsible innovation in digital assets.” It further goes on to call digital assets as “21st-century commodities.”

Though innovation is a word arguably thrown around too often regarding crypto projects, the CFTC’s strategic plan offers clarity on how regulators could approach and regulate digital assets. To improve the resilience of commodity derivative markets, the CFTC aims to promote liquidity and transparency among all trading assets. This focus indicates that due to their illiquid nature, a maximum of top 10 digital assets would make the cut.

The regulatory body further applauded the developments in derivatives on digital assets and the general digitisation of trading in the past few years. “Financial markets quickly adopt emerging technologies, and our derivatives markets have experienced an amazing digital transformation,” the report said.

The new strategic framework establishes the goals of the CFTC for the next 4 years, at the end of which, current Chairman Heath Tarbert’s term is scheduled to end. Speaking about the strategic plan, Tarbert said “I am proud of the hard work that went into developing the plan and the unanimous support it ultimately received. It will guide the last of the CFTC’s unfinished business to completion and better position the agency to tackle the unwritten future.”

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