CFTC Considers 24/7 Derivatives Trading, Impacting Crypto Market

The Commodity Futures Trading Commission (CFTC) is considering the possibility of extending its oversight to include 24/7 trading for derivatives, a move that could significantly impact the crypto market. Bitcoin, the leading asset in the crypto sector, is classified as a commodity by U.S. regulators and courts, placing it under the CFTC's jurisdiction. The agency has issued a request for public comments on whether it should allow for continuous trading in derivatives, a practice already in place for bitcoin and other digital assets.

The CFTC's invitation for comments, released on Monday, does not explicitly address digital asset oversight. However, it highlights the increasing demand and technological advancements driving CFTC-regulated firms to handle transactions around the clock. Acting Chairman Caroline Pham emphasized the need for the CFTC to adopt a forward-looking approach to market structure shifts, ensuring that markets remain vibrant, resilient, and protective of all participants.

Implementing 24/7 trading presents several challenges for U.S. markets, which are not accustomed to such continuous operations. The request for comments outlines various considerations, including governance frameworks, exchange staffing models, and technologies necessary to maintain market integrity and operational resilience. Firms would need to manage live maintenance, technology patches, and human monitoring during extended hours, issues that digital asset operations have already grappled with.

For the CFTC to gain direct authority over the spot-market trading of bitcoin and other tokens not categorized as securities, a change in law would be required. The Securities and Exchange Commission (SEC) would oversee tokens classified as securities. If the CFTC becomes a major regulator of trading and the platforms handling customer transactions, it would enter a space where 24/7 activity is already the norm. This move could further solidify the CFTC's role in the evolving landscape of digital asset regulation.