• The National Futures Association (NFA) has issued a compliance rule for its members engaging in Bitcoin and Ether trading.
• The compliance rule is designed to protect the public from fraud or misconduct, and requires firms to closely supervise their activities.
• The rule will take effect on May 31st and is currently limited to Bitcoin and Ether.
U.S. Futures Watchdog Issues Compliance Rule for Crypto Activities Among Members
The National Futures Association (NFA), which includes firms trading crypto futures, is imposing anti-fraud standards and supervision demands for those engaging in bitcoin and ether trading. The U.S. Commodity Futures Trading Commission oversees the NFA, which as a self-regulatory organization occupies a space between the federal government and industry – allowing it to impose standards on its members under penalty of fines and other punishment, with this new rule extending that power more explicitly to the crypto sector.
What Does the Compliance Rule Do?
The compliance rule 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,” according to an official statement from Wednesday. It also requires members to supervise their activity closely and says that members must have written policies regarding digital asset spot transactions such as risk assessment, customer due diligence, capital requirements, record keeping procedures, dispute resolution mechanisms, etc., all of which must be reviewed by senior management at least annually.
When Will This Take Effect?
The new rule is set to go into effect on May 31st of 2021and is currently limited only to Bitcoin (BTC) and Ether (ETH).
Why Is This Necessary?
In lieu of formal crypto rules from U.S government agencies, this compliance rule creates standards for NFA’s members dealing in digital-assets commodities in order maintain trust within cryptocurrency markets while protecting investors from fraudulent activities or misconducts by exchanges or traders associated with them .
The enforcement of these new regulations are meant not only help prevent illegal activities associated with cryptocurrency but also create an environment conducive for legitimate trading activity so that investors can trade safely without fear of market manipulation or fraudsters preying upon vulnerable investors hoping make easy money off unsuspecting victims .