On July 20, 2018, the National Futures Association (“NFA”) issued an interpretive notice (the “Interpretive Notice”) detailing new disclosure requirements for registered commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) to address certain risks stemming from the recent growth of the virtual currency and virtual currency derivatives markets.
On August 9, 2018, the NFA issued a notice to members confirming that the Interpretive Notice will become effective on Wednesday, October 31, 2018, and provided specific timelines for updating certain related disclosures and filings.
The NFA expects registered CPOs and CTAs engaging in activities involving virtual currencies, virtual currency derivatives or spot market virtual currencies to comply with the Interpretive Notice (by updating documentation and/or filings related to such activities as necessary) as of the following dates:
•Promotional materials – Promotional material related to activities in spot market virtual currencies must be in compliance with the Interpretive Notice on or after October 31, 2018.
•Disclosure documents and offering documents – Disclosure documents or offering documents used for pools, exempt pools or managed account programs must be in compliance with the Interpretive Notice by November 21, 2018.
•Filing requirements – If disclosure documents that have been or are required to be filed with the NFA are updated to comply with the Interpretive Notice, the updated documents must be filed with the NFA by November 21, 2018 (and accepted by NFA before they are used). Disclosure documents with no material changes other than updates to incorporate the standardized/mandated disclosure language from the Interpretive Notice (which is included as Annex A in our Legal Update found here) may be filed for expedited review or, where permitted, as a supplement.
•Notice to existing investors – Updated disclosures addressing the requirements set forth in the Interpretive Notice must be provided to existing investors by November 21, 2018.
•Notice to prospective investors – Updated disclosures addressing the requirements set forth in the Interpretive Notice must be provided to any solicited prospective investors prior to accepting an investment from such person.