Regulators Plot New Path to Win Back U.S. Crypto Markets

The U.S. Commodity Futures Trading Commission (CFTC) is actively considering the recognition of foreign crypto platforms under its existing regulatory frameworks, particularly those compliant with the European Union’s Markets in Crypto-Assets Regulation (MiCA) and similar international regimes. This move is part of a broader initiative aimed at addressing the regulatory fragmentation that has led to a significant portion of U.S. crypto trading activity shifting offshore. Acting CFTC Chairman Caroline D. Pham emphasized the importance of leveraging the CFTC’s long-standing cross-border recognition rules, originally established in the 1990s, to facilitate a return of these activities under U.S. oversight.

Pham highlighted that many U.S. crypto firms have relocated to jurisdictions with clearer regulatory frameworks, such as those in Europe, Asia, and the Middle East, due to the lack of regulatory clarity in the United States. The CFTC is now seeking to streamline its cross-border approach to ensure that foreign exchanges with comparable regulatory standards—such as those regulated under MiFID or MiCA—can gain recognition in the U.S. market. This would enable U.S. market participants to access these platforms while maintaining alignment with American regulatory principles.

The CFTC’s approach also reflects a shift in focus from regulatory enforcement to fostering innovation and market accessibility. Pham underscored the need to avoid repeating past regulatory missteps, such as those seen with the Dodd-Frank Act, which she argued created unnecessary market barriers and fragmentation. Instead, the CFTC is advocating for a "technology-neutral" and activity-based regulatory model that reduces entry barriers for startups and entrepreneurs. This is part of the broader "Crypto Sprint" initiative launched by the CFTC, which includes public consultations on listed spot crypto trading and seeks input from the public by October 20.

In addition to international recognition efforts, the CFTC is working closely with the U.S. Securities and Exchange Commission (SEC) to harmonize regulatory approaches across agencies. Pham mentioned that the CFTC and SEC will host a joint roundtable to discuss regulatory alignment on issues such as product definitions, data standards, and innovation exemptions. This collaborative effort follows the release of the Trump Administration’s digital asset roadmap, which outlines a comprehensive strategy for modernizing banking rules, strengthening oversight of stablecoins, and introducing regulatory tools such as safe harbors and sandboxes.

The CFTC’s efforts are part of a larger push to bring regulatory clarity to the digital asset market and to position the U.S. as a global leader in crypto innovation. The agency is also encouraging existing U.S.-registered exchanges—such as the NYSE, Nasdaq, CBOE, and CME—to prepare for spot crypto trading under their oversight. This suggests that the CFTC and SEC are both moving toward a regulatory environment that supports the integration of crypto assets into traditional financial markets, while maintaining investor protections and market integrity.