In light of the FTX incident, the US CFTC is developing a draft proposal to strengthen supervision and protect customer funds

According to Bloomberg, the US CFTC is drafting a proposed draft to strengthen regulatory defense and protect client funds. In response to the collapse of FTX last year, the proposal aims to expand the scope of existing regulations to include exchanges that allow customers to trade without going through a broker. The report stated that FTX's subsidiary LedgerX is regulated by the CFTC and has successfully protected client funds by separating them from company assets. This asset separation prevents FTX from accessing client funds, and the CFTC requires LedgerX to maintain this separation as a condition for directly providing fully guaranteed encrypted derivatives to customers. CFTC official Kristin Johnson stated that the provisions requiring the segregation of client assets should apply to any company that uses a similar direct customer-facing model, regardless of the type of derivative it provides. The goal is to prevent the abuse or loss of client funds and avoid future crises like the collapse of FTX. The CFTC is under pressure to take rapid action and implement rules to protect client funds, especially in complex financial products such as leveraged encrypted derivative trading. The proposed rules currently being drafted will ensure parallel protection of client funds and narrow the gap in protection for retail investors. (Pymnts)