CFTC Introduces Spot Crypto Trading Under Federal Oversight

Key Highlights

• The CFTC’s new initiative would bring spot crypto trading under federal regulation for the first time
• Stakeholders have until August 18 to weigh in on how these markets should be structured
• Rather than wait for Congress, the CFTC is using its existing authority to fast-track oversight

The U.S. Commodity Futures Trading Commission (CFTC) has made a huge announcement for a new initiative to rein in the Wild West of cryptocurrency trading. 

Acting Chairman Caroline D. Pham announced plans on Thursday to open federally regulated markets for spot crypto trading, which is a direct challenge to the offshore exchanges that have dominated the sector with little oversight.

The initiative, part of the agency’s newly launched “crypto sprint,” seeks to allow Bitcoin, Ethereum, and other digital assets to trade on CFTC-registered futures exchanges under the same rules governing oil, wheat, and other commodities. 

If successful, it would make the first time U.S. retail investors could trade cryptocurrencies on a federally supervised platform. This would provide protections against manipulation and fraud that are virtually nonexistent on unregulated venues like Binance or Bybit.

A Regulatory End-Run?

Pham, a longtime advocate for bringing crypto under the CFTC’s umbrella, is leveraging a little-known provision of the Commodity Exchange Act that already requires leveraged retail commodity trading to occur on approved exchanges.

“Under President Trump’s strong leadership and vision, the CFTC is full speed ahead on enabling immediate trading of digital assets at the Federal level in coordination with the SEC’s Project Crypto,” said Acting Chairman Pham. 

“There is a clear and simple solution the CFTC can implement now. The Commodity Exchange Act currently requires that retail trading of commodities with leverage, margin, or financing must be conducted on a DCM. Starting today, we invite all stakeholders to work with us on providing regulatory clarity on how to list spot crypto asset contracts on a DCM using our existing authority, as I have previously proposed since 2022. Together, we will make America the crypto capital of the world,” she added further.

The move is seen as a strategic move after years of congressional gridlock on crypto regulation. Rather than waiting for lawmakers to pass new legislation, the CFTC is using its existing authority to fast-track oversight.

CFTC Seeks Public Feedback

The agency is now soliciting public feedback on critical issues, including:

• Whether spot crypto contracts can be structured to comply with DCM listing rules.
• How to handle assets that might fall under both CFTC and SEC jurisdiction.
• Potential conflicts with state-level money transmission laws.

Stakeholders, from Wall Street firms to crypto startups, have until August 18 to submit comments. The feedback will shape what could become the first federally regulated spot crypto market in the U.S.

If the CFTC succeeds, it could finally bring legitimacy to a market long plagued by scandals, from the collapse of FTX to rampant wash trading. But critics warn that forcing crypto onto traditional exchanges might hinder liquidity or push traders back into offshore gray markets.

CFTC and SEC Finally Align on Crypto Regulation

The latest announcement from CFTC comes after SEC Chairman Paul Atkins announced “Project Crypto,” which will be the SEC’s north star in aiding President Trump in his historic efforts to make America the “crypto capital of the world.”

Speaking at the America First Policy Institute, Atkins explained a plan to integrate blockchain into financial markets. This approach is completely in contrast to the enforcement-heavy approach of former Chairman Gary Gensler. 

The initiative, backed by President Trump’s GENIUS Act for stablecoin regulation, aims to clarify asset classifications, streamline custody rules, and support “super-apps” for trading and lending under one license. 

In a press release, the SEC chairman made clear that “most crypto assets are not securities.” This statement will end regulatory ambiguity. 

These developments just came after the White House’s Working Group disclosed a report advocating digital asset leadership. 

Paul Atkins said, “I have directed the Commission staff to work to develop clear guidelines that market participants can use to determine whether a crypto asset is a security or subject to an investment contract. Our goal is to help market participants to slot crypto assets into categories, such as digital collectibles, digital commodities, or stablecoins, and assess the economic realities of a transaction. This approach can allow market participants to determine, based upon clear guidelines, whether any outstanding promises or commitments of the issuer cause the crypto asset to be subject to an investment contract.”