A self-regulatory organization is a non-governmental entity that exercises regulatory authority over its members, typically within a specific industry or profession. SROs create and enforce rules to govern the conduct of their participants, aiming to maintain ethical standards, ensure market integrity, and protect investors. They operate under the oversight of a government agency, supplementing official regulation with industry-specific expertise. Examples include the National Futures Association in the US financial markets.
Context
The role of self-regulatory organizations in the digital asset sector is a subject of ongoing discussion, particularly concerning how best to apply existing SRO models to nascent crypto markets. Debates often involve the scope of SRO authority and their effectiveness in overseeing rapidly evolving technologies and diverse market participants. Future developments may see the establishment of new SROs specifically for digital assets or the expansion of existing SROs’ mandates to cover crypto-related activities.
The NFA is pivoting from prescriptive disclosures to a principles-based conduct framework, dynamically expanding anti-fraud compliance to all CFTC-listed digital commodities.
Firms must immediately update compliance and supervision frameworks as NFA Rule 2-51's scope dynamically expands to all listed digital commodity derivatives.
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