On June 1, 2023, The Commodity Futures Trading Commission (CFTC) published an advanced notice of proposed rulemaking (ANPRM) seeking public comment on potential amendments to the Risk Management Program (RMP) requirements in CFTC Regulations 23.600 and 1.11 (collectively, “RMP Regulations”), which are applicable to swap dealers (SDs) and futures commission merchants (FCMs).

In the ANPRM, the CFTC is “seeking information regarding any risk areas that may exist in the RMP Regulations that the Commission should consider with respect to notable product or technological developments.” The CFTC acknowledges that the RMP Regulations were established before swap dealers and futures commission merchants engaged with product offerings such as derivatives on certain digital assets. Hence, among other things, the CFTC is specifically interested in hearing how they should amend their RMP Regulations to account for such relevant technological innovations.

With respect to digital assets the ANPRM:

  • States that it is the Commission’s understanding “that no FCM holds customer property in the form of virtual currencies or other digital assets such as stablecoins.” However, it requests comment on whether current RMP Regulations would adequately and comprehensively cover the risks of a FCM holding customer property in the form of virtual currencies or stablecoins.
  • Requests comment on whether the Commission should consider additional RMP requirements applicable to SDs and FCMs that “are or may become involved in, or affiliated with, the provision of digital asset financial services or products (e.g., digital asset lending arrangements or derivatives).”
  • Requests comment on whether there are risks posed by affiliates “trading in digital asset markets.”

The Proposed Rule was published in the Federal Register on July 18, 2023, and therefore commenters have until September 18, 2023 to submit comments.

The author wishes to acknowledge the contributions of summer associate Henry Little.