The Importance of Compliance in Futures Trading: New Rules from the National Futures Association

Learn more about new requirements for NFA members dealing in Bitcoin and Ethereum.

The National Futures Association (NFA) recently adopted a new compliance rule, NFA Compliance Rule 2-51, that sets forth anti-fraud, equitable principles of trade, and supervision requirements for NFA Members and Associates engaged in digital asset commodity activities. The rule's scope currently applies to Bitcoin and Ether, with Interpretive Notice 9073 already in place for virtual currency activities. The rule becomes effective on May 31, 2023.

Over 100 NFA Members have reported digital asset-related business activities, with no specific requirements for Members in spot digital asset commodity activities, apart from Interpretive Notice 9073. Therefore, the Board determined to adopt the new compliance rule to discipline a Member or protect the public if fraud or similar misconduct occurs in their spot digital asset commodity activities.

The new rule also requires Members and supervisory Associates to diligently supervise these activities and implement appropriate policies and procedures.

The CPO/CTA, FCM, IB, and Swap Participant Advisory Committees unanimously supported the adoption of NFA Compliance Rule 2-51.

NFA's February 28, 2023 submission letter to the CFTC contains more detailed information regarding NFA Compliance Rule 2-51. If you have any questions regarding NFA Compliance Rule 2-51, please contact Mike Schorsch, Assistant General Counsel (mschorsch@nfa.futures.org or 312-781-1360).

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