US CFTC Asks For Public Input On Digital Asset Risk Management: 'The Commission Needs To Revisit Our Regulatory Oversight'

In an effort to revamp and modernize its risk management regulations, the U.S. Commodity Futures Trading Commission (CFTC) solicited public feedback on potential updates.

The CFTC released a proposal on Thursday, inviting commentary on suggested alterations to its risk management program, including: 1. Technology Risk, 2. Cyber Risk, 3. Affiliate Risk, 4. Risk related to segregating customer funds and safeguarding counterparty collateral and 5. Climate-Related Financial Risk.

CFTC Commissioner Christy Goldsmith Romero stressed these modifications must account for the inherent volatility and potential risks associated with digital assets held by businesses.

Romero, in her statement, pointed out that "emerging technologies, including digital assets, artificial intelligence and cloud services, carry significant risk."

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Romero further elaborated, "These technological advancements, with their accompanying risks, necessitate the Commission revisiting our regulatory oversight, including our risk management requirements. This is similar to other regulators revisiting their oversight in this area."

Romero also brought attention to the ongoing concerns around the industry's practices in safeguarding clients' assets. She noted, "Brokers may consider maintaining customer assets in the form of stablecoins or other digital assets, potentially leading to unanticipated and unique risks."

The public is invited to share their views on the CFTC's "advance notice of proposed rulemaking" for 60 days.

This notice marks the beginning of a process that would ultimately lead to a formal proposed rule and a final vote.

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