CFTC Moves To Reassess Risk Management – Could This Mean Big Changes For Crypto?

As the crypto industry continues to grow and mature, regulators are continuously taking steps to ensure that the industry is subject to appropriate oversight and regulation. The Commodity Futures Trading Commission (CFTC) has published an advanced notice of proposed rulemaking (ANPRM) seeking public comment on potential amendments to the Risk Management Program (RMP) requirements in CFTC Regulations.

These regulations are applicable to swap dealers and futures commission merchants and aim to ensure sound risk management in the derivatives markets.

The ANPRM seeks feedback on several areas of the RMP regulations, including governance and structure, the enumerated risks RMPs must monitor and manage, and the specific risk considerations RMPs must take into account. It also seeks comments on how the risk exposure report required under the RMP regulations could be improved or modified.

CFTC Commissioner Urges Regulatory Oversight For Crypto Investments

In a recent public statement, CFTC Commissioner Christy Goldsmith Romero emphasized the need for regulatory oversight to address the risks associated with certain crypto investments. Romero cited the recent failure of Silvergate Bank as an example of the potential risks that these investments can pose.

Furthermore, the CFTC has highlighted “significant risks” associated with crypto assets. Silvergate Bank, which provided services to crypto firms, experienced an outflow of deposits from digital asset customers in the fourth quarter of 2022, resulting in a 68 percent loss in deposits from $11.9 billion to $3.8 billion. This rapid loss of deposits caused the bank to sell debt securities to cover deposit withdrawals, resulting in a net earnings loss of $1 billion.

For the US regulator, the collapse of Silvergate Bank demonstrates risks associated with crypto and has stated the need for effective risk management in the derivatives markets. The CFTC further claimed that as the crypto market continues to gain popularity and mainstream adoption, it is important for regulators to ensure that the risks assoc

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Author: Ronaldo Marquez

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