CFTC, State Regulators Partner on Crypto, Fraud Info Sharing

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By Lydia Beyoud

The CFTC and state securities regulators are joining forces to increase cooperation and information sharing on cryptocurrencies and other potential market fraud, the heads of the two groups said May 21.

“The MOU will focus our collective resources to better uphold the law,” Commodity Futures Trading Commission Chairman J. Christopher Giancarlo said of the memorandum of understanding signed with the North American Securities Administrators Association (NASAA).

The MOU for confidential information sharing will only apply to NASAA’s U.S. members.

The announcement comes the same day as NASAA announced “Operation Cryptosweep,” a joint operation among more than 40 U.S. and Canadian jurisdictions to launch nearly 70 investigations or inquiries into cryptocurrency-related investments, including initial coin offerings.

The enforcement sweep formed in the beginning of May, NASAA officials said.

CFTC Crypto Derivatives Advisory

The CFTC will also issue a staff advisory in the next 48 hours on heightened review of new virtual currency products, to provide guidance to exchanges and clearinghouses on certain enhancements when listing a derivatives contract based on virtual currencies, Giancarlo said.

“The advisory will clarify CFTC staff priorities and expectations in reviewing new virtual currency derivatives to be listed on designated contract markets or swap execution facilities, or to be cleared by derivative clearing organizations,” he said.

The advisory will reflect CFTC staff’s “current thinking based upon our growing experience with virtual currency derivatives. As new products are brought forth, the staff will re-evaluate and revisit the advisory as necessary to address any new and emerging issues,” Giancarlo said.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bloomberglaw.com

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com

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