Regulators Take Steps to Adapt to Emerging Technologies in Finance

The Commodity Futures Trading Commission (CFTC) has taken steps to adapt to emerging technologies, including holding its inaugural meeting of the Innovation Advisory Committee (IAC). The IAC aims to provide practical policy advice on complex issues at the intersection of technology, law, policy, and finance. Key topics discussed included crypto's regulatory evolution, AI and compute within derivatives markets, and prediction markets.

The U.S. Securities and Exchange Commission (SEC) has proposed a tailored offering regime for certain investment contracts involving crypto assets, known as 'covered investment contracts.' This proposal follows the SEC's interpretive release on the application of the Howey test to crypto assets and aims to address longstanding industry criticism of the 'regulation by enforcement' approach.

The CFTC has also proposed amendments to its registration requirements for commodity pool operators (CPOs) and commodity trading advisors (CTAs), including a new exemption for SEC-registered investment advisers acting as CPOs with respect to commodity pools offered solely to sophisticated investors.