NFA Digital Asset Compliance Rule Goes Effective May 31

Starting May 31, National Futures Association (“NFA”) Members and Associates that engage in digital asset commodity activities must comply with NFA Compliance Rule 2-51 (“Rule 2-51” or the “Rule”) regarding anti-fraud, just and equitable principles of trade, disclosure, and supervision requirements.1 By adopting Rule 2-51, and in conjunction with NFA Interpretive Notice 9073 for which the Rule specifically requires compliance, the NFA extends its oversight of Members’ and Associates’ digital asset commodities activities in the digital asset commodity spot markets.2

For purposes of Rule 2-51, “digital asset commodity” or “digital asset commodities” mean Bitcoin and Ether.3 While the Commodity Futures Trading Commission (“CFTC”) has identified additional digital assets as commodities, NFA has not included them within the definition of the Rule.4 If and when NFA identifies additional digital assets as commodities, the Rule may be amended to include such additional digital assets.5

Interpretive Notice 9073, issued in 2018, requires certain disclosures be provided to investors that underscore the nature of virtual currencies and virtual currency derivatives and the risk of loss that may arise by trading them.6 Prior to Rule 2-51, Interpretive Notice 9073 was the NFA’s primary rule or notice related to regulating digital asset activities in the spot markets.

CFTC Commissioner Caroline D. Pham praised the NFA’s enactment of Rule 2-51 and its imposition of detailed disclosure obligations on offering and promotional materials so that investors are fully informed before making any trading decisions in Bitcoin or Ether.7 Commissioner Pham noted that Rule 2-51 will allow NFA to enforce market conduct rules, which is one of the key fundamentals for regulating the digital asset market.8

The Financial Industry Regulatory Authority (“FINRA”) and NFA recently conferred and agreed to expand the self-regulatory organizations’ (“SROs”) Memorandum of Understanding to address information sharing and collaboration regarding digital assets, blockchain developments and associated regulatory risks.9 FINRA and NFA’s partnership is intended to further the respective SROs’ mandates and better serve the investing public with respect to digital asset products and asset classes by leveraging their shared expertise.10

NFA Compliance Rule 2-51

Fraud and Related Matters

No Member or Associate engaging in activities involving any digital asset commodity shall:

  • Cheat, defraud, or deceive, or attempt to cheat, defraud or deceive any other person involved in those activities;
  • Make a communication related to a digital asset commodity that operates as a fraud or deceit; employs or is part of a high-pressure approach; or makes any statement that trading in digital asset commodities is appropriate for all persons;
  • Willfully make or cause to be made a false report, or willfully enter or cause to be entered a false record in or in connection with any transaction involving a digital asset commodity;
  • Disseminate, or cause to be disseminated, false or misleading information, or a knowingly inaccurate report, that affects or tends to affect the price of any digital asset commodity;
  • Engage in manipulative acts or practices regarding the price of any digital asset commodity; or
  • Embezzle, steal, or purloin, or knowingly convert to its own use or the use of another, any money, securities, digital assets or other property received from or accruing to any person in connection with a transaction involving a digital asset commodity.

Just and Equitable Principals of Trade & Supervision

With respect to digital commodities activities, Members must diligently supervise its employees and agents for or on behalf of the Member and Associates who supervise Members activities must diligently exercise such duties. Rule 2-51 also requires Members and their Associates to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business involving any digital asset commodity.

Disclosure and Related Matters

Rule 2-51 mandates compliance with NFA Interpretive Notice 9073.11 Interpretive Notice 9073 sets out certain disclosure obligations for futures commission merchants, introducing brokers, commodity pool operators and commodity trading advisors engaging in virtual currency derivatives and transactions.12

NFA Members and Associates are encouraged to carefully review the disclosure obligations under both Interpretive Notice 9073 and Rule 2-51.

Footnotes -

  1. Rule 2-51. Requirements for Members and Associates Engaged in Activates Involving Digital Asset Commodities, NFA (effective May 31, 2023), 2-51. Rule 2-51 only applies to NFA Members and Associates. Entities not registered with NFA who engage in digital asset commodities activities would not be covered by the Rule, nor would they be required to register with the NFA.

  2. Proposed NFA Compliance Rule 2-51: Requirements for Members and Associates Engaged in Activities Involving Digital Asset Commodities, NFA (Feb. 28, 2023), By extending the scope of the rule to cover digital asset commodities, the NFA aligns itself with the CFTC’s anti-fraud jurisdiction over the spot commodity markets.

  3. Id.; see also Rule 2-51.

  4. The CFTC has pursued enforcement cases for fraud and manipulation in spot market for certain stablecoins, including Litecoin (LTC), Tether (USDT) and Binance USD (BUSD).

  5. See Proposed NFA Compliance Rule 2-51.

  6. NFA Interpretive Notice 9073 – Disclosure Requirements for NFA Members Engaging in Virtual Currency Activities; NFA (Oct. 31, 2018),

  7. See Statement of Commissioner Caroline D. Pham Regarding NFA Rule on Spot Digital Asset Commodity Activities, CFTC (Mar. 31, 2023),

  8. Id.; see also Keynote Address by Commissioner Caroline D. Pham, 18th Nasdaq Technology of the Futures Conference - Reimagining Tomorrow’s Markets, CFTC (Jun. 28, 2022),

  9. FINRA and NFA Discuss Crypto Assets at Special Summit, NFA (May 10, 2023),

  10. Id.

  11. See Rule 2-51; see also NFA Interpretive Notice 9073.

  12. Id.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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