The Commodity Futures Trading Commission (CFTC) has taken steps to standardize its regulatory approach by withdrawing two staff advisories concerning digital asset derivatives. These decisions suggest that the agency intends to apply consistent oversight across derivatives products, whether digital or traditional. The move comes in parallel with broader regulatory adjustments, including updates from the Federal Deposit Insurance Corporation (FDIC) that lessen their prior restrictions on crypto-related banking activities. The reassessment signals a maturing view of the crypto market’s role in the broader financial ecosystem and a shift from earlier cautionary stances.
Back in 2023, the CFTC had issued guidance to address specific risk considerations for digital assets. That advisory highlighted the need for registrants of derivatives clearing organizations (DCOs) to be especially vigilant about system safeguards, settlement processes, and potential conflicts of interest tied to crypto assets. Now, the Division of Clearing and Risk (DCR) has withdrawn that guidance, stating a desire to avoid suggesting any differentiation in how digital asset derivatives are regulated.
Why Did CFTC Withdraw the Digital Asset Advisory?
What Does the Shift Mean for Crypto Derivatives Oversight?
According to the CFTC’s Letter No. 25-08, the withdrawn advisory, issued in May 2023, may have implied a more stringent or separate standard for digital asset products. Removing the letter is meant to reinforce that all derivatives products are subject to the same core regulatory principles. The DCR emphasized that this action does not weaken its oversight capabilities.
“DCR conducts its supervision of clearing activities and oversight of compliance with the Commodity Exchange Act and commission regulations consistently, regardless of the specific commodity underlying relevant contracts,”
the agency stated. The DCR clarified that its responsibilities to ensure financial integrity and prevent systemic risk remain unaffected.
Separately, the Division of Market Oversight (DMO) and the DCR also rescinded CFTC Staff Advisory No. 18-14, which advised on the listing of virtual currency derivative products. This earlier guidance had served as a checklist for exchanges planning to list crypto-based derivatives. The withdrawal reflects regulators’ increased familiarity with these instruments and recognition of market developments since the advisory was first issued in 2018.
“DMO and DCR determined to withdraw the advisory given additional staff experience with virtual currency derivative product listings and increasing market growth and maturity,”
the joint letter stated in CFTC Letter No. 25-07.
On the same day, the FDIC introduced new guidance allowing banks under its supervision to participate in cryptocurrency-related activities without securing prior approval, provided they maintain proper risk controls. This marked a shift from the agency’s previous stance that required institutions to notify regulators in advance. These changes together suggest a broader regulatory pivot toward integrating digital assets more seamlessly into existing financial structures.
Earlier public statements from the CFTC suggested a cautious approach to digital assets, often labeling them high-risk and emphasizing the need for enhanced scrutiny. With increasing institutional involvement and maturing technological infrastructure in the crypto space, the agency’s latest move appears to reflect a reconciliatory strategy to bring regulatory parity. This also corresponds with growing pressure from industry stakeholders for clearer, consistent rules.
The CFTC’s decision to treat digital asset derivatives like traditional derivatives may ease market uncertainty and reduce compliance complexity for exchanges and clearinghouses. However, firms engaged in crypto-related trading must still ensure robust internal controls to meet the general requirements of the Commodity Exchange Act. Market participants should not interpret the withdrawals as a relaxation of standards but as a sign of regulatory normalization. For investors and firms, understanding that crypto derivatives are now under the same umbrella as conventional derivatives could improve integration and encourage broader adoption, while reducing legal ambiguity. Going forward, any developments in this space are likely to be assessed through the same lens as other regulated financial products.
