Registered crypto exchanges will not be prohibited from trading certain spot crypto and digital asset products in the US, according to a joint statement from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission
In a joint statement, the SEC and CFTC confirmed these products would be tradable as long as they are compliant with the Commodity Exchange Act.
This act requires “retail commodity transactions” to be conducted under the oversight of the CFTC’s designated contract market. However, commodity transactions listed on the SEC’s national securities exchange will be exempt.
The realignment of spot crypto trading under the guidance of either the SEC and CFTC aims to demonstrate how “two agencies can coordinate to promote trading venue choice and optionality for market participants,” read the joint statement.
Both the SEC and CFTC will review requests from Debt Capital Markets (DCMs), Foreign Boards of Trades (FBOTs), and National Stock Exchanges (NSEs) who seek to facilitate crypto sport trading on their platforms.
The regulatory duo listed the following considerations before any DCM, FBOT or NSE requests for spot crypto trading:
- Margin, Clearing, and Settlement: Applicable rules permit clearinghouses to partner with a custodian to maintain customer accounts.
- Monitoring of Underlying Markets: Sharing of reference pricing venues by NSEs, DCMs, and FBOTs enhances effective market surveillance. The Divisions stand ready to assist with any questions that arise related to effective information sharing.
- Public Dissemination of Trade Data: Public dissemination of transactions by NSEs and DCMs provides the public with valuable data. The Divisions stand ready to consider any questions that arise about making spot crypto asset market data from NSEs and DCMs publicly available.
- Promoting Fair and Orderly Markets: Efficient executions and transparency promote trading opportunities and competition among market participants. The Divisions are prepared to engage with trading venues about applying fair and orderly market principles as they seek to operate markets for participants to trade spot crypto asset products.
“Under the prior administration, our agencies sent mixed signals about regulation and compliance in digital asset markets, but the message was clear: innovation was not welcome. That chapter is over,” said CFTC Chairman Caroline D. Pham.
“By working together, we can empower American innovation in these markets and build on President Trump’s collaborative approach to making America the crypto capital of the world. Today’s joint agency statement is the latest demonstration of our mutual objective to support growth and development in these markets, but it will not be the last.”
Another example of US crypto growth?
The SEC and CFTC working together to bring forth regulatory clarity over spot crypto trading will likely be seen as another step in the US’ bid to become the global crypto capital.
Over the past two years, under the the Biden Administration, these regulatory agencies were once at odds with each other over who should bear the responsibility to enforce regulations upon crypto exchanges in the US. The result was a flurry of SEC lawsuits against several exchanges under the Biden Administration.
Nick Jones, Founder and CEO of Edinburgh-based digital asset company Zumo, believes the collaboration between the SEC and CFTC is “another example of the US deliberately and proactively embedding crypto in the mainstream”.
“The US is benefiting from a more joined-up approach. This announcement shows that the two agencies are now working in tandem to help expand venue choice and competition,” said Jones.
“It’s only right that market participants have the freedom to choose where they trade spot crypto assets – and now they will have access to some of the world’s largest venues, such as the NYSE and Nasdaq. It’s yet another example of the US deliberately and proactively embedding crypto in the mainstream while cementing its leadership in an industry that will come to redefine financial services.”
“While UK legislators and regulators shy around taking any proactive crypto position, it’s a reminder that those unashamed to demonstrate pro-crypto leadership are cornering this emerging area of innovation and growth.”
