The CFTC [Commodity Futures Trading Commission] has published an advisory to futures commission merchants [FCM] offering clarity on the way to take care of users’ virtual currencies in segregated accounts.
In line with an official announcement from the CFTC’s Division of Swap Dealer & Intermediary Oversight, the advisory informs FCMs on the way to hold and report certain digital assets held by users in reference to physically delivered futures contracts or swaps.
A segregated account means customer funds are strictly separated from a firm’s money.
The CFTC added that holding user assets as segregated funds may let greater risks arise for the opposite customers under the same banner.
The financial watchdog’s advisory also provides guidance on best practices FCMs should follow once they design and maintain risk management programs when handling virtual assets as user funds.
The advisory doesn’t pertain to foreign FCMs’ digital assets custody of customer’s assets in reference to trading futures or options on futures.
The CFTC’s Division Director Joshua B. Sterling added within an official statement that the commission was “committed to fostering responsible fintech innovation” as it works toward creating a “holistic framework for virtual asset derivatives.”