CFTC Adds Crypto Entities to Registration Deficient List (RED List) and Creates Office of Technology Innovation (OTI) to Bolster Fintech Efforts | Practical Law

CFTC Adds Crypto Entities to Registration Deficient List (RED List) and Creates Office of Technology Innovation (OTI) to Bolster Fintech Efforts | Practical Law

The CFTC added 34 unregistered foreign entities, including a number of crypto entities. to its Registration Deficient List (RED List) and created the Office of Technology Innovation (OTI), formerly LabCFTC, reorganizing its Fintech and customer protection efforts.

CFTC Adds Crypto Entities to Registration Deficient List (RED List) and Creates Office of Technology Innovation (OTI) to Bolster Fintech Efforts

by Practical Law Finance
Published on 27 Jul 2022 • USA (National/Federal)
The CFTC added 34 unregistered foreign entities, including a number of crypto entities. to its Registration Deficient List (RED List) and created the Office of Technology Innovation (OTI), formerly LabCFTC, reorganizing its Fintech and customer protection efforts.
On July 14, 2022, the CFTC added 34 unregistered foreign entities, including a number of crypto entities, to its Registration Deficient List (RED List). The CFTC's RED List, created in 2015, is a list of entities that are not appropriately registered with the CFTC as required by the Commodity Exchange Act (CEA) but have been identified as acting in a capacity that appears to require CFTC registration, such as trading binary options, foreign currency, or other products.
RED-listed entities have been deemed to be working as intermediaries, meaning they act on behalf of others in connection with trading futures, swaps, or options. The addition of these 34 new entities to the RED List brings the total number on the RED List up to 202 entities (see Legal Update, CFTC Adds 22 Entities to RED List). The CFTC lists RED-listed entities on its RED List webpage, which links to each listed entity's respective profile page to provide information to traders such as:
  • The origin of the entity.
  • The type of product offered.
  • The date the entity was added to the RED List.
  • The risks associated with engaging with unregistered foreign entities.
The CFTC notes that its inclusion of an entity’s name on the RED List does not mean that the CFTC or a court has concluded that a violation of any provision of the CEA or the CFTC’s regulations has occurred. The CFTC recommends traders be cautious of unregistered firms or individuals when participating in products or markets that historically have seen a large number prior fraud complaints such as binary options, forex, digital currencies, commodity pools, and precious metals. The RED List is circulated to financial industry partners and complements registration information provided by the National Futures Association (NFA).
The RED List now includes the following newly added entities:
  • CloseOption closeoption.com
  • B.O TradeFinancials Cryptospherefx.com
  • CryptoBO cryptobo.com
  • Bitpay Options bitpayoptions.com
  • CryptoSphereFX Cryptospherefx.com
  • Direct Cryptos directcryptos.com
  • FX-Cryptex fx-cryptex.com
  • Prime Crypto FX primecryptofx.com
On July 26, 2022, the CFTC announced a reorganization of its fintech and customer protection efforts by creating the Office of Technology Innovation (OTI), formerly LabCFTC (see Legal Updates, CFTC Launches LabCFTC Fintech Initiative and LabCFTC Issues Primer on Digital Assets). According to the CFTC, the newly formed OTI will continue the CFTC’s effort to incorporate innovation and technology into the agency’s regulatory oversight functions by supporting the operating divisions and the CFTC’s participation in domestic and international coordination.