In the absence of formal crypto rules from U.S. government agencies, the National Futures Association is setting up standards for its members that deal in digital-assets commodities.

The NFA – which as a so-called self-regulatory organization occupies a space between the federal government and industry – has more than 100 members involved in digital assets, the organization said in a statement on the new rule, which is set to go into effect on May 31. The NFA's self-regulation of the derivatives industry allows it to impose standards on its members under penalty of fines and other punishment, and this rule extends that power more explicitly to the crypto sector.

The compliance rule – now limited to involvement with bitcoin (BTC) and ether (ETH) – gives the NFA “the ability to discipline a member or take other action to protect the public if a member commits fraud or similar misconduct with respect to its spot digital asset commodity activities,” the group said in the statement on Wednesday. It also requires members to supervise their activity closely and says that members involved in spot crypto commodity activity “must adopt and implement appropriate supervisory policies and procedures over these activities.”

The Commodity Futures Trading Commission oversees the NFA and the wider industry, though questions remain about the extent of its authority over digital assets. A number of legislative efforts in Congress have sought to give the CFTC undeniable powers over crypto commodities and the spot market, but the bills haven’t produced any results.

“This is a clear example of using existing authority to ensure that there are customer protections in place,” CFTC Commissioner Caroline Pham said Friday in a statement posted on the CFTC website. “These obligations will require NFA members and associates to explicitly disclose the risks associated with trading spot bitcoin and ether, so that customers are fully informed before making any trading decisions.”

UPDATE (March 31, 2023, 18:11 UTC): Adds comment from CFTC Commissioner Pham.

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Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.