CFTC Withdraws Specialized Guidance On Cryptocurrency Derivatives

By: Jake Gray

In line with the Securities and Exchange Commission’s (“SEC”) transformation from cryptocurrency enemy to ally, the Commodity Futures Trading Commission (“CFTC”) is now following its sister agency’s lead. By withdrawing its specialized guidance on digital currency derivatives, the CFTC signals a more hospitable regulatory approach to the industry, one that recognizes the growing maturity and mainstream acceptance of digital asset markets. As of March 28, 2025, both CFTC Staff Advisory No. 18-14 and the subsequent 2023 guidance, CFTC Staff Advisory No. 23-07, have been officially withdrawn, marking a clear departure from the agency’s previous cautionary stance.[1][2]

What’s In the Advisories

The CFTC’s first digital asset advisory, Letter No. 18-14, came in 2018 when digital asset derivatives products and their spot markets were new, innovatively dynamic, and starting to enter mainstream financial markets.[3] The guidance came three years after the CFTC determined that Bitcoin and other virtual currencies are properly defined as commodities rather than securities (also in tandem with the SEC), but are nevertheless unlike other commodities the CFTC has seen traditionally, making specific guidance necessary. The CFTC’s guidance focused on five areas:

1. Enhanced market surveillance. The CFTC recommended exchanges establish information sharing arrangements with spot markets to access broader trade data, including trader identities, prices, volumes, and quotes.
2. Coordination with CFTC staff. Exchanges were expected to maintain regular communication with the CFTC on surveillance matters, provide data related to settlement processes upon request, and coordinate the timing of new contract launches to allow for proper monitoring of the new instruments. As an aside, the vast majority of new contracts regulated by the CFTC are self-certified without consultation to the Commission.
3. Large trader reporting. Due to manipulation concerns, the CFTC recommended exchanges set the large trader reporting threshold at five bitcoin (or equivalent), which is significantly lower than typical commodity thresholds. This aimed to identify potential manipulative activity by capturing 70-90% of total open interest.
4. Outreach to stakeholders. Exchanges were directed to solicit feedback beyond standard market participants, including from futures commission merchants (otherwise known as FCMs), even those not planning to offer clearing services. This expanded consultation aimed to inform contract design and identify potential risks overlooked in standard development processes.
5. DCO risk management. For Derivatives Clearing Organizations (“DCOs”), or clearinghouses, the CFTC emphasized margin requirements exceeding those for less volatile commodities, requiring margin levels commensurate with the unique volatility profiles of digital assets.

A later 2023 advisory (Letter No. 23-07) maintained a narrow focus for DCOs, emphasizing concerns about system safeguards, physical settlement procedures, and conflicts of interest in digital asset clearing.[4]

What Withdrawing Them Means

Friday’s withdrawal is part of a major shift in the federal government’s regulatory approach toward cryptocurrency. By eliminating these special guidance documents, the CFTC is signaling its intent to facilitate easier listing of new cryptocurrency-based products on regulated exchanges, which reflects greater mainstream acceptance and market demand in recent years, specifically following the Trump Administration’s amicability toward the industry.

This normalization has several important implications:

1. Reduced compliance burden. Exchanges can now list new cryptocurrency derivatives without meeting additional requirements beyond those applied to other commodity contracts.
2. Standardized oversight. Digital asset derivatives will be governed and regulated under the CFTC’s general regulatory framework rather than through specialized guidance.
3. Institutional confidence. The removal of digital-asset-specific requirements will encourage greater institutional participation in cryptocurrency derivatives markets, enhancing market depth and stability.
4. Market recognition. The withdrawal implicitly acknowledges that cryptocurrency markets have developed adequate price discovery mechanisms, transparency, and liquidity to function within standard regulatory parameters, concerns which were behind the CFTC’s previous guidance.

The recent policy changes of both the SEC and CFTC bring about the most auspicious conditions the cryptocurrency industry has ever seen, marking a milestone in cryptocurrency’s journey from regulatory outlier to an accepted part of the mainstream financial landscape.  As stated in today’s withdrawal letter, the CFTC determined to withdraw the advisory “given additional staff experience with virtual currency derivative product listings and increasing market growth and maturity” — a clear acknowledgment from the CFTC that they believe that the cryptocurrency market has evolved beyond the need for specialized regulatory treatment.

[1] https://www.cftc.gov/PressRoom/PressReleases/9059-25

[2] https://www.cftc.gov/PressRoom/PressReleases/9060-25

[3] https://www.cftc.gov/csl/18-14/download

[4] https://www.cftc.gov/csl/23-07/download