CFTC Aims to Bridge Global Crypto Regulation Gap

The U.S. Commodity Futures Trading Commission (CFTC) is considering integrating compliance-focused overseas crypto exchanges into its cross-border oversight framework, as part of its broader strategy to streamline regulation and foster innovation in digital assets. Acting Chairman Caroline D. Pham emphasized the importance of a pragmatic cross-border regulatory approach during recent remarks to the UK All-Party Parliamentary Group on Blockchain Technologies, signaling a shift toward harmonizing domestic and international compliance standards. The CFTC is exploring whether trading platforms licensed under the European Union’s Markets in Crypto-Assets (MiCA) regulation or comparable regimes could qualify under its existing cross-border recognition rules. This initiative aims to facilitate lawful onshore trading activity while ensuring alignment with U.S. regulatory objectives, including market integrity and investor protection [1].

Pham highlighted that regulatory ambiguity and an enforcement-first approach in recent years have driven U.S. firms to establish operations in foreign jurisdictions with clearer frameworks, particularly in Europe under the Markets in Financial Instruments Directive (MiFID). To reverse this trend, the CFTC is seeking to clarify its Foreign Board of Trade (FBOT) registration framework, which allows non-U.S. exchanges to offer trading access to U.S.-based participants. The CFTC recently issued an advisory reaffirming that the FBOT framework applies to all asset classes, including digital assets, and provides a streamlined pathway for non-U.S. exchanges to comply with U.S. regulations without duplicative registration requirements [3]. This move is intended to welcome back U.S. firms that have relocated abroad and to attract international platforms that adhere to robust regulatory standards [3].

The CFTC’s efforts align with the Trump Administration’s broader digital asset policy, outlined in the President’s Working Group on Digital Asset Markets report. The report calls for modernized banking rules, stronger oversight of stablecoins, and the adoption of tools such as safe harbors and regulatory sandboxes to promote innovation. In response, the CFTC launched a “Crypto Sprint” initiative to gather public input on key regulatory issues, including the onboarding of spot crypto trading on existing U.S. exchanges. Comments on the initiative are due by October 20, and the CFTC has emphasized the need for technology-neutral regulations that adapt to evolving market conditions without stifling competition [2].

In parallel, the CFTC is working closely with the Securities and Exchange Commission (SEC) to harmonize regulatory approaches. A joint roundtable on regulatory coordination is scheduled for September 29, focusing on aligning product definitions, data standards, and innovation exemptions. The collaboration reflects a shared recognition that overlapping jurisdictions and fragmented oversight have hindered innovation and created uncertainty for market participants. Both agencies have expressed a commitment to leveraging existing authorities to streamline compliance and reduce unnecessary regulatory burdens [1].

The CFTC’s recent enforcement actions also underscore its renewed focus on addressing compliance-related violations while prioritizing resource allocation toward fraud and market abuse. Acting Chairman Pham announced the successful completion of an enforcement sprint initiative, which resolved six cases involving compliance violations by major financial institutions, including UBS AG, Citigroup, and Santander. These actions resulted in civil monetary penalties totaling $8.325 million and required firms to submit detailed remediation plans [1]. The initiative reflects the CFTC’s broader strategy to refocus enforcement efforts on high-impact issues while encouraging voluntary compliance.

Source:

[1] Joint Statement from the Chairman of the SEC and Acting Chairman of the CFTC (https://www.cftc.gov/PressRoom/SpeechesTestimony/phamatkinsstatement090525)

[2] Remarks by Acting Chairman Caroline D. Pham before the UK All-Party Parliamentary Group on Blockchain Technologies (https://www.cftc.gov/PressRoom/SpeechesTestimony/opapham18)

[3] CFTC Issues Advisory to Clarify FBOT Registration Framework (https://www.jonesday.com/en/insights/2025/09/cftc-issues-new-advisory-on-fbot-registration-framework)