According to Cointelegraph: The United States Commodity Futures Trading Commission (CFTC) has recently proposed a modification to the rules governing futures commission merchants (FCMs) and derivative clearing organizations (DCOs). The new proposal demands these firms invest customer funds in assets with high liquidity, but, intriguingly, doesn't cover the unique operations of LedgerX.
LedgerX differs from traditional DCOs and FCMs by allowing direct customer interactions, instead of relying on intermediaries. CFTC Commissioner Kristin Johnson has expressed concerns, suggesting that current regulatory protocols fail to keep pace with the fast-moving financial industry. LedgerX's unique service of offering direct client access contrasts with established industry norms.
Notably, LedgerX, once related to FTX and currently under Miami International Holdings, made a name for itself by directly settling cryptocurrency transactions for clients. This approach deviates from the standard industry practice of involving intermediaries. LedgerX has acquired multiple CFTC registrations, bolstering its services with improved consumer safeguards like asset segregation.
According to Johnson, there is a need for a revised regulatory structure that offers blanket protection for retail customers—regardless of whether they trade through intermediaries or directly with non-intermediated DCOs like LedgerX. Her call to action coincides with the period during which the public has been given 75 days to comment on the CFTC's proposal. This window for feedback could prove instrumental in guiding the CFTC on how to address the regulatory gaps identified by Johnson.
For customer interests and fair trading environments to be maintained, it's crucial the CFTC ensures its regulatory measures keep up with the ever-evolving derivatives market.
