NFA Reminds Members of Ongoing Disclosure and Reporting Obligations Related to Virtual Currency | Practical Law

NFA Reminds Members of Ongoing Disclosure and Reporting Obligations Related to Virtual Currency | Practical Law

The National Futures Association (NFA) issued a reminder to members engaged in virtual currency activities of their related ongoing disclosure and reporting requirements.

NFA Reminds Members of Ongoing Disclosure and Reporting Obligations Related to Virtual Currency

by Practical Law Finance
Published on 14 Jun 2021 • USA (National/Federal)
The National Futures Association (NFA) issued a reminder to members engaged in virtual currency activities of their related ongoing disclosure and reporting requirements.
On June 3, 2021, the National Futures Association (NFA), a self-regulatory organization (SRO) for the US derivatives market, issued a reminder to members involved in virtual currency activities of certain ongoing disclosure and reporting requirements. The NFA stated it was reminding members of obligations in light of recent volatility in the virtual currency market. The reminder is addressed to NFA-member futures commission merchants (FCMs), introducing brokers (IBs), commodity pool operators (CPOs), and commodity trading advisors (CTAs) who participate in activities related to virtual currencies or virtual currency derivates.
The reminder states that:
  • NFA-member FCMs, IBs, CPOs, and CTAs must comply with the disclosure requirements set out in a 2018 interpretative notice. The interpretive notice requires member FCMs and IBs to provide customers with certain NFA and CFTC advisory notices and, if the FCM or IB offers spot-market virtual currency services, it must also provide customers with a standardized disclosure stating the NFA's limited regulatory authority of spot virtual currency products and markets.
  • CPO and CTA members must provide customers with "robust" disclosures related to spot-market virtual currencies and virtual currency derivatives, as well as standardized disclosures related to the NFA's limited authority. For more information on these disclosure requirements see Legal Update, Updated: NFA Interpretive Notice Requires Enhanced Virtual Currency Disclosures for CPOs, CTAs, FCMs, and IBs.
  • FCMs and IBs that accept or solicit virtual currency derivatives and CPOs and CTAs that execute virtual currency transactions or virtual currency derivatives must immediately notify the NFA by amending its annual questionnaire. The annual questionnaire (which is part of the NFA member application procedure), allows the NFA to better view and understand their membership base, and all member firms are required to update their questionnaire every year. For more information on the annual questionnaire and required reporting requirements see Legal Update, NFA Issues Reporting Requirements for CPOs and CTAs that Trade Virtual Currency Products.