US Explores New Cryptocurrency Taxation and Derivatives Listing Guidelines

Regulation 1 min, 39 sec READ

by Nick Tsakanikas

The CFTC will provide new guidelines for cryptocurrency-based derivatives. The agency aims to enhance the regulatory compliance of exchanges.

The Commodity Futures Trading Commission announced the formation of an advisory team that will provide all the CFTC-registered exchanges and clearinghouses with guidance for digital currency derivative products. The advisory team will help exchanges keep pace with new innovations and changes in the sector, relieving them from self-regulatory responsibilities.

According to CFTC’s report, the Division of Market Oversight’s (DMO) new guidelines will include enhanced market surveillance in close coordination with regulators. In addition, the Division of Clearing and Risk (DCR) will advise the members about risk management and governance issues when listing Bitcoin futures contracts. The other key areas of focus are outreach to member and market participants and large volume trader reporting.

According to Christopher Giancarlo, Chairman of the CFTC:

“This advisory will reflect CFTC staff’s current thinking based on our growing experience with virtual currency derivatives. As new products are brought forth, staff will reevaluate and revisit the advisory, as necessary, to address any new and emerging issues.”

Cryptocurrencies have been treated as commodities in the United States since 2015, hence they are subject to the CFTC’s regulations.

Both the CBOE and CME exchanges launched Bitcoin futures trading in December 2017 to enable traders to invest in the hyper-volatile asset within a regulated background. However, the continued lack of transparency of the majority of crypto exchanges has led many investors to voice concerns and call for more oversight. 

The CFTC’s report is just one part of the constantly-expanding regulatory framework around cryptocurrency-based financial products. Digital assets tax reform will also be discussed during a dedicated session at the 2018 Accounting Change for Finance Leaders Conference on June 18. In general, accounting and taxation are rapidly changing as new rules are put in place to adapt to the unique challenges of cryptocurrencies.