Statement Summary
The SEC and CFTC are collaborating on a cross-agency initiative to enable trading of specific spot crypto asset products, as part of ongoing efforts to foster innovation in blockchain technology within the U.S. This initiative stems from recommendations in the President’s Working Group report aimed at enhancing regulatory clarity for crypto assets.
The Divisions assert that current laws allow certain registered exchanges to facilitate trading in these assets and are encouraging exchanges to submit proposals to facilitate this trading. They highlight the importance of regulatory cooperation to enhance market choice for participants while ensuring compliance with existing laws regarding retail commodity transactions. For further inquiries, market participants can contact the respective divisions.
Original Statement
Staff of SEC and CFTC
The SEC’s Division of Trading and Markets and the CFTC’s Division of Market Oversight and Division of Clearing and Risk (collectively, the “Divisions”) are announcing a cross-agency initiative in furtherance of the SEC’s Project Crypto and the CFTC’s Crypto Sprint to coordinate efforts regarding the process for enabling the trading of certain spot crypto asset products.
The President’s Working Group on Digital Asset Markets report on “Strengthening American Leadership in Digital Financial Technology” (the “PWG Report”) recommends that the SEC and CFTC coordinate to make America the best place in the world to innovate with blockchain technology and participate in crypto asset markets.
Specifically, the PWG Report recommends that the agencies should use their existing authorities to promote “regulatory clarity that best keeps blockchain-based innovation within the United States.” As part of this effort, the Divisions are coordinating to issue guidance “regarding the listing of leveraged, margined, or financed spot retail commodity transactions on digital assets” to implement the PWG Report recommendations.
This joint statement provides the Divisions’ view that current law does not prohibit SEC- or CFTC-registered exchanges from facilitating trading of these spot crypto asset products. As contemplated by the PWG Report, the Divisions’ coordination will promote trading venue choice and optionality for market participants within the United States. In line with these goals, the Divisions stand ready to support consideration by their respective agencies of exchange trading in certain spot crypto asset products.
Absent an exception or other appropriate relief, the Commodity Exchange Act (CEA) requires that certain leveraged, margined, or financed “retail commodity transactions” be conducted on a CFTC-registered designated contract market (DCM) or on a CFTC-registered foreign board of trade (FBOT). One such exception is for retail commodity transactions listed on an SEC-registered national securities exchange (NSE).
Today, the Divisions provide their view that DCMs, FBOTs, and NSEs are not prohibited from facilitating the trading of certain spot crypto asset products. Market participants are invited to engage with SEC staff or CFTC staff, as needed.
The Divisions will promptly review filings and requests by DCMs, FBOTs, and NSEs seeking to facilitate trading of certain spot crypto asset products. As market participants prepare to submit any necessary registrations, proposals, or requests for appropriate relief to the SEC and/or CFTC, the Divisions stand ready to engage regarding any questions.
Contact Information
The following considerations are relevant to market participants seeking to operate markets and trade spot crypto asset products:
- SEC Division of Trading and Markets: (202) 551-5777, tradingandmarkets
- CFTC Division of Market Oversight: (202) 418-5000, DMOLetters
- CFTC Division of Clearing and Risk: (202) 418-5430, DCR
This statement represents the views of the staff of the Divisions. It is not a rule, regulation, guidance, or statement of the SEC or the CFTC, and the SEC and the CFTC have neither approved nor disapproved its content. This statement, like all staff statements, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.
