The US Commodity Futures Trading Commission (CFTC) has focused its attention on how firms handle client assets.
The recent CFTC proposal seeks to improve rules for futures commission merchants (FCM) and derivatives clearing organizations (DCO). These companies are now required to invest client funds in highly liquid assets. However, the revised rules do not take into account LedgerX's unique operating model.
LedgerX operates as a DCO, establishing direct connections with clients and deviating from the conventional role of FCMs as intermediaries.
CFTC Commissioner Kristin Johnson has increase concerns, highlighting that the regulatory framework lags behind the rapid evolution of the industry. LedgerX, which was previously affiliated with FTX and is currently part of Miami International Holdingsoperates in a unique sector by providing direct access to customers, deviating from established industry conventions.
LedgerX has attracted attention for its efforts to directly settle cryptocurrency transactions for clients, diverging from the conventional practice of involving intermediaries. The company has successfully obtained several CFTC registrations, bolstering its operations with greater consumer safeguards such as asset segregation.
Johnson advocates for a revised regulatory framework that would provide uniform protection to retail clients, regardless of whether they trade through brokers or directly with non-brokered DCOs like LedgerX.
Related: CFTC pays whistleblowers $16 million this year mostly for cryptocurrency tips
This call to action coincides with the public being given 75 days to comment on the proposal. This period of dialogue has the potential to guide the CFTC in addressing the regulatory deficiencies highlighted by Johnson.
It is the CFTC's responsibility to ensure that regulatory measures remain aligned with the ever-changing derivatives market. This is essential to protect the interests of retail customers and maintain a level and fair environment.
Magazine: Deposit Risk: What Do Crypto Exchanges Really Do With Your Money?
Post navigation
