MoFo's Financial Markets & Innovation

CFTC Division of Market Oversight Issues No-Action Position on Reporting Requirements for Exclusively Self-Cleared Contracts

On September 2, the CFTC Division of Market Oversight (the Division) issued a no-action letter permitting a designated contract market (DCM) to continue to report on behalf of participants that trade directly with the DCM as though the relevant contracts were exclusively self-cleared contracts, even if intermediaries begin separately trading those contracts. The Division reasoned that the exclusively self‑cleared contracts reporting exemption “shift[s] reporting obligations from traders, who are generally not well-positioned to perform routine regulatory reporting, to DCMs, which, by virtue of their regulated status, substantial resources, internal controls, and lines of communication with the Commission, are better able to submit position and identifying data to the Commission on a daily basis.”

New Jersey Asks the Supreme Court to Review Court Split on Prediction Market Jurisdiction

After the Third U.S. Circuit Court of Appeals and the Ninth U.S. Circuit Court of Appeals split on prediction markets jurisdiction, New Jersey petitioned the Supreme Court to address the legality and regulatory treatment of prediction markets. New Jersey’s petition could set a landmark precedent on how states and the federal government share regulatory authority over these emerging platforms. If the Supreme Court agrees to hear the case, it could have far-reaching implications for the burgeoning prediction market industry and for state sovereignty over gambling regulation.

Block Seeks OCC National Trust Charter

Block, Inc. is the latest fintech to enter the crypto banking race with their recent application to the OCC for a national trust bank charter. A national trust bank charter would allow Block to provide custody, settlement, and related banking services for digital assets on a nationwide basis, without needing to secure individual state licenses. While Block already owns Square Financial Services, an FDIC-insured bank, the new trust charter is intended to specifically add crypto to its banking offerings. This move places Block alongside a growing number of crypto-native and fintech firms seeking banking credentials to expand their digital asset operations.

House Leaders Remove Voting Days, CLARITY Act Options Limited

The CLARITY Act has reportedly stalled in Congress after failing to advance before a key procedural deadline. The cloture vote in the Senate is scheduled for September 15, but House leaders have removed the weeks of September 21 and September 28 from the voting schedule. This leaves just four voting days before the midterm elections in November, which lessens the likelihood of passage. Should the House fail to vote on the CLARITY Act before the midterms, it’s uncertain whether 120th Congress seated in 2027 will muster enough votes for passage.