Source: U.S. SEC and CFTC
The U.S. Securities and Exchange Commission (SEC) Division of Trading and Markets and the Commodity Futures Trading Commission (CFTC) Division of Market Oversight and Division of Clearing and Risk announced an interagency initiative to further the SEC's Project Crypto and the CFTC's Crypto Sprint, coordinating efforts to enable trading processes for certain spot crypto-asset products.
The Presidential Working Group on Digital Asset Markets' report, titled "Strengthening U.S. Leadership in Digital Financial Technologies" (the "PWG Report"), recommends that the SEC and CFTC coordinate efforts to make the United States the best place globally to innovate with blockchain technology and participate in the crypto-asset market. Specifically, the PWG Report recommends that the two agencies use existing authorities to promote "regulatory clarity to maximize the scope of limiting blockchain-based innovation to the United States." As part of this effort, the two agencies are coordinating the issuance of guidance on "Listing Leveraged, Margined, or Funded Spot Retail Digital Asset Products" to implement the recommendations of the PWG report. This joint statement expresses the agencies' view that existing law does not prohibit exchanges registered with the SEC or CFTC from facilitating trading in these spot crypto-asset products. As outlined in the PWG report, this coordination will promote choice and availability of trading venues for market participants within the United States. To achieve these goals, the agencies stand ready to support their respective institutions as they consider conducting exchange trading of certain spot crypto-asset products. The Commodity Exchange Act (CEA) requires certain leveraged, margined, or financed "retail commodity transactions" to be conducted on a CFTC-registered designated contract market (DCM) or a CFTC-registered foreign exchange (FBOT), unless an exception or other appropriate relief exists. One exception is for retail commodity transactions listed on an SEC-registered national securities exchange (NSE). The two agencies stated today that DCMs, FBOTs, and NSEs are not prohibited from facilitating trading in certain spot cryptoasset products. Market participants may communicate with SEC or CFTC staff as needed.
Considerations for Market Participants
The Division will promptly review applications and requests submitted by DCM, FBOT, and NSE to facilitate trading in certain spot cryptoasset products. The Division stands ready to answer any questions as market participants prepare to submit any necessary registration, proposal, or appropriate relief requests to the SEC and/or CFTC. The following considerations are relevant to market participants seeking to operate markets and trade spot cryptoasset products:
Margin, Clearing, and Settlement: The Division believes that applicable rules permit clearinghouses to collaborate with custodians to maintain customer accounts.
The SEC's Division of Trading and Markets stands ready to answer questions from SEC-registered clearing organizations seeking to participate.
The CFTC's Division of Clearing and Risk stands ready to answer questions from CFTC-registered derivatives clearing organizations (DCOs). The Department stands ready to address any regulatory questions regarding the commercial relationship between the DCO and the NSE. Underlying Market Monitoring: The Departments believe that a shared reference pricing platform among the National Stock Exchange (NSE), Designated Contract Markets (DCMs), and Foreign Exchanges (FBOTs) enhances market oversight. The Departments stand ready to address any questions regarding effective information sharing. Public Release of Trading Data: The Departments believe that public release of trading data from the National Stock Exchange (NSE) and Designated Contract Markets (DCMs) provides valuable data to the public. The Department stands ready to address any questions regarding the public availability of NSE and DCM spot cryptoasset market data. Promoting Fair and Orderly Markets: The Department believes that efficient execution and transparency promote trading opportunities and foster competition among market participants. The Department stands ready to work with trading venues to implement fair and orderly market principles in their efforts to operate markets for participants to trade spot cryptoasset products.
Innovation in Investor and Customer Protection: The Departments stand ready to work with market participants to encourage technological innovation in markets and transactions, while ensuring investor and customer protection.
“Today’s joint announcement represents an important step in bringing innovation in the crypto asset markets back to the United States,” said SEC Chairman Paul Atkins. “Market participants should be free to choose where to trade spot crypto assets. The SEC is committed to working with the CFTC to ensure our regulatory framework supports innovation and competition in these rapidly evolving markets.”
“Under the previous administration, our two agencies sent mixed signals regarding regulation and compliance in digital asset markets, but the message was clear: innovation is not welcome. That phase is over,” said CFTC Acting Chairwoman Caroline D. Pham. "By working together, we can empower American innovation in these markets and, building on President Trump's collaborative approach, further advance the United States as the cryptocurrency capital of the world. Today's joint announcement is the latest expression of our shared goal to support the growth and development of these markets, but it will certainly not be the last." The U.S. SEC's Division of Trading and Markets and the CFTC's Division of Market Oversight and Division of Clearing and Risk are coordinating efforts to facilitate the trading of certain spot crypto-asset products on registered exchanges. This initiative is part of the SEC's Project Crypto and the CFTC's Crypto Sprint initiatives and builds on the recommendations of the President's Task Force on Digital Asset Markets' report on "Strengthening U.S. Leadership in Digital Financial Technologies." Each department stands ready to communicate with market participants and support their respective agencies' consideration of trading certain spot crypto-asset products on exchanges. Market participants are encouraged to contact SEC or CFTC staff to discuss any questions or concerns they may have.
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