In a first-of-its-kind move, the Commodity Futures Trading Commission (CFTC) has taken a leap toward bringing a major change in the crypto industry. The commission has approved spot crypto trading on federally regulated exchanges, reducing its reliance on offshore crypto exchanges and platforms.
For those less aware, offshore crypto refers to financial services that conduct crypto-related activities, such as trading, holding, or managing assets outside a country.
Caroline Pham, the acting CFTC Chairman, announced that the federally regulated exchanges, meaning exchanges registered with the commission, can trade listed spot cryptocurrencies.
CFTC’s new oversight protects investors and exchanges
As the CFTC now allows federally regulated exchanges to accept spot trading, the US crypto industry is witnessing new regulatory oversight aimed at ensuring safety and security. Pham officially stated:
Under my leadership this year, the CFTC is finally using our decades-long existing authority to work smarter and faster to protect Americans who deserve safe U.S. markets now, not offshore exchanges that lack basic safeguards against uncontrolled customer losses.
What was before CFTC’s new oversight?
Crypto spot trading already existed in the US. However, it has mostly been limited to crypto exchanges and brokers that were not under the CFTC-regulated exchanges.
Earlier, the commission’s oversight was limited to a few enforcement activities, like monitoring malpractices such as fraud, and manipulation. It not execute any comprehensive federal framework for spot crypto exchanges.
With the new regulatory oversight, CFTC has more power to oversee trading venues registered under the commission, and spot trading contracts can take place on such venues or futures exchanges regulated by CFTC.
Experts react to CFTC’s decision
Following the new regulatory move, several industry analysts have applauded the decision, saying the US ended the offshore crypto era. Shanaka Anslem Perera, author and analyst, opined that the commission refused to give proper regulatory clarity over spot trading for the past fifteen years, and Americans were pushed to offshore services.
In his viewpoint, this new regulation is framed under existing authority and does not require any new legislation, related negotiations, or delays from Congress to come into effect.
For Nate Geraci, President of NovaDius wealth management firm, CFTC’s regulatory move allows major brokerages to list spot crypto assets and brings confidence to operate more effectively.
The CFTC’s latest regulatory posture comes amid US President Donald Trump’s plans to make America the crypto capital of the world.
This landmark move also emerged from the recommendations of the “President’s Working Group on Digital Asset Markets, public engagement, and the expert input of stakeholders, CFTC staff, and other regulators.”
