On September 2, the staff of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) issued a Joint Staff Statement regarding the listing of leveraged, margined, or financed spot retail commodity transactions on digital assets. Specifically, the SEC’s Division of Trading and Markets and the CFTC’s Division of Market Oversight and Division of Clearing and Risk shared their view that “current law does not prohibit” SEC- or CFTC-registered exchanges from facilitating trading of those spot crypto asset products.
The Divisions also committed to “promptly review filings and requests” by CFTC-registered designated contract markets (DCMs), CFTC-registered foreign boards of trade (FBOTs) and SEC-registered national securities exchanges (NSEs) seeking to facilitate trading of those products.
The Divisions stated their views on a number of additional regulatory matters impacting market participants, including:
- Clearinghouses are permitted to partner with custodians to maintain customer accounts;
- Sharing reference pricing venues among NSEs, DCMs, and FBOTs enhances market surveillance;
- Public dissemination of transaction data by NSEs and DCMs provides valuable information to the public;
- Efficient executions and transparency foster trading opportunities and competition among market participants; and
- The Divisions are prepared to assist and collaborate with market participants to encourage technological innovation while ensuring investor and customer protections.
SEC Chairman Paul Atkins said the “joint staff statement represents a significant step forward” in drawing crypto innovation back onshore. He also noted that “market participants should have the freedom to choose where they trade spot crypto assets. The SEC is committed to working with the CFTC to ensure that our regulatory frameworks support innovation and competition in these rapidly evolving markets.”
“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 Acting Chairman Caroline D. Pham. She also remarked that the “joint agency statement is the latest demonstration of our mutual objective of supporting growth and development in these markets, but it will not be the last.”
As a reflection of the SEC’s Project Crypto and the CFTC’s Crypto Sprint, the 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.
Our Take
This cross-agency guidance and invitation for engagement should be welcomed changes for market participants and is specifically intended to build on the recommendation of President Trump’s Working Group on Digital Asset Markets report on “Strengthening American Leadership in Digital Financial Technology” that the agencies use their existing authorities to promote regulatory clarity to keep blockchain-based innovation within the United States. Of course, the joint statement merely expresses the views of the Divisions’ staff and is not official guidance or a statement of the SEC or the CFTC and, accordingly, has no legal force or effect.
