CFTC or the Commodity Futures Trading Commission is an independent US government agency established in 1975 that regulates the US derivative markets, including features, options, and swaps. Its current chairman is Rostin Behnam.
CFTC’s mission
CFTC’s mission is to protect the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.
The CFTC’s main tasks include:
- Protect traders: Regulate trading activities and ensure that traders are protected from potential risks in the commodity futures market.
- Ensure fairness: Prevent brokers from affecting the interests of traders, ensuring fairness in the market.
- Promote transparency: Ensure that all information related to trading contracts and trading activities is always open and transparent.
- Reduce risks and prevent fraud: Issue regulations and guidelines to reduce risks and prevent fraud, ensuring the safety of market participants.
- Educate and training: Organize training courses and provide materials to help traders better understand the commodity futures markets and similar financial products.
- Advice and support: Advice and support to entities involved in the commodity futures markets and and similar financial products, including brokers, traders and investors.
- Make important decisions: Make important decisions regarding the commodity futures markets and similar financial products.
How CFTC impact on the crypto market
The CFTC has many major impacts on the US financial markets and global markets as well. With control over derivative transactions, digital assets such as crypto, its decisions have great power. Any crypto news from the CFTC, both positively and negatively, leads to FOMO or FUD.
In September 2021, the CFTC fined Kraken $1.25M for offering illegally margined digital asset transaction services and did not register as a futures commodity merchant (FCM) with the regulatory agency.
By September 2022, with rumors that XRP would be managed by the CFTC, XRP surged 70% in just 5 days. The reason was, if XGR is regulated by the CFTC, it will not be labeled as a security but a commodity, increasing its chances of winning a lawsuit against the SEC.
Binance CEO CZ and his company have also been caught up in a lawsuit with the CFTC for violating US derivatives trading laws.
The power of this agency is also proven by the successful lawsuit against Ooki DAO, forcing this project to pay a fine and leave the US on June 10, 2023.