CFTC Issues New Guidelines to Facilitate US Access to Foreign Crypto Exchanges
By: Eva Baxter
The United States Commodity Futures Trading Commission (CFTC) has unveiled an advisory that clarifies the registration process for foreign crypto exchanges wishing to provide direct market access to American citizens. This update, promoted by Acting Chair Caroline Pham, aims to rectify trading activities redirected out of the US due to previous enforcement actions. The new guidance promises to deliver an extended framework that accommodates non-US exchanges across various asset classes, including digital assets.
The advisory reconfirmed the longstanding regulatory framework established since the 1990s, enabling foreign exchanges to serve US traders without having to register as designated contract markets. This move is seen as a significant step toward providing the essential regulatory clarity to legally bring back trading activities to the United States, which were previously moved abroad due to unclear regulatory guidelines. This evolving dynamic comes as inquiries about Foreign Board of Trade (FBOT) registrations have increased, reflecting the expanding global derivatives market, igniting the need for regulatory homogenization.
The guidance specifically addresses the regulatory confusion that ensued following various enforcement actions, effectively offering a clear path for American companies previously forced to establish operations in foreign jurisdictions. It mandates that foreign exchanges demonstrate equivalent regulatory supervision in their respective jurisdictions while establishing cooperative information-sharing agreements with US authorities. Furthermore, registered FBOTs will be authorized to provide direct access to eligible US participants, including proprietary traders and registered intermediaries like futures commission merchants.
The CFTC's guidance extends its application universally across traditional and digital asset markets, eschewing the necessity for asset class distinctions in registration requirements. Designed to uphold the stringency of customer protection standards, all trades must be cleared through CFTC-registered firms or entities recognized under Regulation 30.10. This advisory comes shortly after the adoption of Nasdaq's surveillance system, signifying a bolstering of oversight mechanisms intended to manage the burgeoning crypto and derivatives trading sectors. This move reaffirms the CFTC’s overarching goal to enable seamless and secure trading under US regulations while simultaneously integrating global market players into the US trading ecosystem.
