CFTC Permits Cboe to Provide Clearing Services for Digital Asset Futures on Margined Basis | Practical Law

CFTC Permits Cboe to Provide Clearing Services for Digital Asset Futures on Margined Basis | Practical Law

The CFTC issued an order amending the order of registration of Cboe Clear Digital, LLC (Cboe) to permit Cboe to provide clearing services for digital asset futures on a margined basis for futures commission merchants (FCMs).

CFTC Permits Cboe to Provide Clearing Services for Digital Asset Futures on Margined Basis

by Practical Law Finance
Published on 08 Jun 2023 • USA (National/Federal)
The CFTC issued an order amending the order of registration of Cboe Clear Digital, LLC (Cboe) to permit Cboe to provide clearing services for digital asset futures on a margined basis for futures commission merchants (FCMs).
On June 5, 2023, the CFTC issued an order (2023 order) amending the order of registration of Cboe Clear Digital, LLC's (Cboe) to permit Cboe to provide clearing services for digital asset futures contracts on a margined basis for futures commission merchants (FCMs). The 2023 order imposes certain requirements on Cboe as part of its permission to clear digital asset futures contracts, including to:
  • Maintain funds of its clearing members separate and distinct from its own funds.
  • Obtain and endeavor to maintain, to the extent commercially reasonable, insurance coverage for theft or loss of participant digital asset collateral.
  • Fully disclose to any potential clearing member, in plain language, material risks associated with the clearing of digital asset contracts, including, the theft, loss, or hacking of the underlying digital asset.
  • Engage an independent certified public accountant to audit Cboe’s digital asset balances and issue an opinion on the accounting treatment of digital assets held by Cboe on an annual basis.
The 2023 order was accompanied by a CFTC press release and a statement by CFTC Commissioner Christy Goldsmith Romero, in which she stated that she supported Cboe's application only in light of additional measures for critical risk-mitigation requested by her that were incorporated in the 2023 order.