CFTC advisory committee votes to advance digital assets taxonomy

The Commodities Futures Trading Commission’s (CFTC) Global Markets Advisory Committee (GMAC) has voted to advance the Digital Asset Markets Subcommittee’s taxonomy recommendation to provide consistent language for participants in the digital asset ecosystem and “support U.S. regulatory clarity and international alignment.”

The recommendation for “Adoption of an Approach for the Classification and Understanding of Digital Assets” was put forward by the Digital Asset Markets Subcommittee and passed without objection at the GMAC meeting last week.

The recommendation will now be put forward for CFTC consideration. It aims to standardize terminology for classifying assets and their functions to provide increased regulatory clarity, including in digital assets, central bank digital currencies (CBDCs), and stablecoins.

“The Subcommittee has engaged digital asset stakeholders across the broader digital asset ecosystem to build a common approach for the classification and understanding of digital assets,” said the GMAC.

“This approach aims to set out consistent language for participants in the digital asset ecosystem to promote innovation, identify and address risk considerations, and enable effective regulatory understanding.”

The clear, ‘consensus-driven approach’ to classifying assets would build upon the classification efforts of global prudential standard setters and regional authorities, including the Bank for International Settlements (BIS) and the Financial Stability Board (FSB).

The GMAC recommended this approach be considered on an initial basis, noting that “as the digital asset ecosystem continues to evolve, so too will the terminology used to classify it.”

The Digital Asset Markets Subcommittee will reassess any future developments to provide further recommendations for this approach based on the guidance of its members.

“The Subcommittee seeks to support effective rules and regulations for digital assets, and recommends continued collaboration between industry, standard-setting bodies, and the regulatory community,” added the GMAC.

CFTC Commissioner Caroline Pham, who sponsors the GMAC, also praised the recommendation:

“In a major step forward, the digital asset taxonomy framework provides valuable foundational guidelines to further advance the discussion and promote U.S. regulatory clarity, and was extensively vetted by stakeholders such as regulatory authorities, financial institutions, asset managers, market infrastructures, and service providers.”

The digital asset taxonomy recommendation was advanced alongside two other recommendations aimed at promoting U.S. Treasury markets resiliency and efficiency.

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