CFTC Launches Task Force to Facilitate Innovation in Derivatives Markets

The Commodity Futures Trading Commission (CFTC) has launched a task force dedicated to advancing “clear rules of the road” for those who want to build novel products and technologies within U.S. derivatives markets.

The Innovation Task Force and the regulator’s existing Innovation Advisory Committee will work with the CFTC to develop a clear regulatory framework for crypto assets and blockchain technologies; artificial intelligence and autonomous systems; and prediction markets and event contracts, the CFTC said in a Tuesday (March 24) press release.

Led by Michael J. Passalacqua, senior adviser to the chairman of the CFTC, the Innovation Task Force will execute the commission’s innovation agenda and will coordinate with other federal agencies and departments, including the Securities and Exchange Commission (SEC) and its Crypto Task Force, on innovation initiatives, according to the release.

CFTC Chairman Michael S. Selig said in the release: “By establishing a clear regulatory framework for innovators building on the new frontier of finance, we can foster responsible innovation at home and ensure American market participants are not left on the sidelines.”

It was reported March 12 that the CFTC and the SEC took a significant step toward coordinated oversight of digital assets and other emerging financial technologies by announcing a memorandum of understanding designed to harmonize how the two agencies regulate overlapping areas of financial markets, including the crypto sector.

Days later, on March 17, the CFTC and the SEC provided greater clarity about their respective rules around crypto assets. The SEC issued an interpretation that clarifies how federal securities laws apply to certain crypto assets and transactions involving crypto assets, while the CFTC provided guidance that said it will administer the Commodity Exchange Act (CEA) consistent with the SEC’s interpretation.

In another recent move, the CFTC said March 12 that it is seeking public comment on whether it should amend or issue new regulations governing event contracts traded on prediction markets. The request came in an advanced notice of proposed rulemaking (ANPR) that seeks information about several topics.

Selig said at the time in a press release that the CFTC aims to “promote responsible innovation in our derivatives markets.”