On July 20, the National Futures Association (NFA) submitted to the Commodity Futures Trading Commission for approval a proposed interpretive notice regarding Disclosure Requirements for NFA Members Engaging in Virtual Currency Activities. The new disclosure obligations will apply to all NFA members engaging in transactions in virtual currency derivatives and virtual currency, as well as other activities in underlying or spot virtual currencies.
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Digital Assets and Virtual Currencies
CFTC Issues Customer Advisory on Digital Coins and Tokens
By Kevin M. Foley & James M. Brady on
Posted in CFTC, Digital Assets and Virtual Currencies
The Commodity Futures Trading Commission has issued an advisory warning customers of the dangers of purchasing digital coins or tokens. Among other things, the advisory warns customers that buying digital coins or tokens for speculative purposes carries significant risk and identifies various factors that could affect the current or longer-term value of a digital coin or token, including:
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FSB Publishes Report on Cryptoassets
On July 16, the Financial Stability Board (FSB) published a report on the work of the FSB and standard setting bodies on cryptoassets. The report was delivered to the G20 Finance Ministers and Central Bank Governors ahead of their meeting on July 21 – 22.
The standard setting bodies, whose work is summarized in the FSB’s report, are: (1) the FSB itself; (2) the Committee on Payments and Market Infrastructures (CPMI); (3) the International Organization of Securities Commissions (IOSCO); and (4) the Basel Committee on Banking Supervision (BCBS).
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FCA Publishes “Dear CEO” Letter on Cryptoassets and Financial Crime
The UK Financial Conduct Authority (FCA) has published a “Dear CEO” letter dated June 11, on cryptoassets and financial crime. The purpose is to ensure that banks adequately manage the financial crime risks associated with cryptoassets. The FCA defines cryptoassets as any publicly available medium of exchange that features a distributed ledger and a decentralized system for exchanging value.
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Treasury Committee’s Virtual Currencies Inquiry Publishes FCA and Bank of England Evidence
On May 22, the UK’s House of Commons Treasury Committee (Treasury Committee) updated its webpage on its inquiry into what it refers to as “digital currencies.” The webpage now provides links to written evidence the Treasury Committee has received from the UK Financial Conduct Authority (FCA) and the Bank of England (BoE) in which they outline their work in this area.
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FCA Publishes Statement Regarding the Requirement for Firms Offering Cryptocurrency Derivatives To Be Authorized
On April 6, the UK Financial Conduct Authority (FCA) published a statement on the requirement that firms trading in cryptocurrency derivatives may need to be authorized. The statement confirms that performing activities or providing services that amount to regulated activities in relation to derivatives are likely to require FCA authorization when performed in relation to tokens that are issued through an initial coin offering, or cryptocurrencies.
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UK Government Launches Fintech Sector Strategy
On March 22, the UK government held its second annual International Fintech Conference. The Conference forms part of the UK’s plans to maintain its world leading position in technology-enabled innovation in financial services (FinTech).
The Conference follows the launch of the European Commission’s FinTech Action Plan, further details of which are available in the Corporate & Financial Weekly Digest edition of March 9, 2018.
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Mark Carney Criticizes Cryptocurrencies in Speech About the Future of Money
On March 2, the governor of the Bank of England (BoE), Mark Carney, delivered a speech entitled “The Future of Money.”
Mr. Carney highlighted shortcomings of cryptocurrencies and the need for authorities to isolate, regulate or integrate them, with his preference being regulation. Mr. Carney stated that “isolation risks foregoing potentially major opportunities from the development of the underlying payment technologies.” He also suggested that cryptocurrencies do not pose material risks to financial stability due to their relative insignificance.
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European Commission Publishes FinTech Action Plan
On March 8, the European Commission issued a press release unveiling a 23-step action plan on how to harness the opportunities presented by technology-enabled innovation in financial services (FinTech). The European Commission identifies two goals: (1) capitalizing on fast-moving progress in technology to improve the European Union’s economy, and (2) incentivizing a more competitive and innovative European financial sector.
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CFTC and UK Financial Conduct Authority Sign Cooperation Arrangement on Financial Technology Innovation
By Christian B. Hennion & Stanley V. Polit on
On February 19, the Commodity Futures Trading Commission and the UK Financial Conduct Authority (FCA) signed the “Cooperation Arrangement on Financial Technology Innovation,” which memorializes the intention of the CFTC and FCA to collaborate and support their respective financial technology (FinTech) initiatives—LabCFTC and FCA Innovate. The arrangement intends to support these FinTech initiatives through an …