CFTC follows SEC in abolishing "No Deny" settlement clause, a major regulatory win for the US crypto industry and settlement rules

This Wednesday, the U.S. Commodity Futures Trading Commission (CFTC) officially abolished a policy that had been in effect for nearly thirty years. The policy, implemented in 1998, stipulated that defendants could not publicly deny the regulator's allegations when settling CFTC enforcement actions.

Yesterday, the CFTC announced the abolition of this policy, citing that it "may give the false impression that the commission is trying to avoid criticism." This statement from the CFTC also echoes the wording used by the U.S. Securities and Exchange Commission (SEC) when it abolished a similar policy in May.

CFTC Chair Mike Selig stated that this nearly thirty-year-old policy required defendants to promise not to publicly deny allegations in order to reach a settlement. He expressed happiness about the policy's abolition, believing it aligns with the unified approach of government regulatory agencies.

Previously, during the Biden administration, several crypto companies that faced enforcement actions from the CFTC or SEC had long criticized this clause for infringing on their free speech rights.

However, the CFTC indicated that although the policy change grants it greater flexibility in settlement enforcement actions and will not enforce the existing "No Deny" clauses, it may still, in certain cases, require some defendants to admit to certain facts or responsibilities.

Fortunately, under the leadership of the Trump administration, both the CFTC and SEC have gradually withdrawn multiple enforcement actions against crypto companies initiated during the Biden administration.

Just a week before the abolition of this policy, the CFTC also attempted to rescind its $5 million settlement agreement with crypto exchange Gemini, as Selig believed the case was "politically motivated."

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