CFTC Proposes Spot Crypto Trading on Futures Exchanges to Bridge Regulatory Gap

The U.S. Commodity Futures Trading Commission (CFTC) has launched a proposal to allow spot crypto trading on federally registered futures exchanges, known as Designated Contract Markets (DCMs), under its existing authority. Acting Chair Caroline Pham announced the initiative as a foundational step in implementing the President’s Working Group on Digital Asset Markets’ recommendations, part of the CFTC’s broader “Crypto Sprint” initiative aimed at clarifying regulatory oversight and promoting innovation [1]. The move is intended to streamline digital asset trading and foster collaboration between the CFTC and the Securities and Exchange Commission (SEC).

Currently, the SEC regulates spot crypto trading, while the CFTC governs futures derivatives. The proposal would allow futures exchanges to list spot crypto contracts using the Commodity Exchange Act, effectively bridging the regulatory gap between the two agencies. A spot crypto contract would mirror spot prices and be traded on a DCM, similar to futures-style contracts. This approach allows the CFTC to expand its oversight without directly regulating commodities, unless they involve fraud or manipulation [2].

The CFTC is seeking public comment by August 18 on how to structure spot crypto contracts on DCMs, including whether additional safeguards are needed and how conflicts with securities laws might be addressed. The agency is also reviewing Part 40 of its regulations, which outlines DCM requirements, and assessing the implications of the SEC’s framework on non-security assets that may qualify as investment contracts [3]. Pham emphasized the urgency of the initiative, stating the CFTC has a “clear and simple solution” to enable digital asset trading at the federal level, in coordination with the SEC’s Project Crypto [4].

The initiative reflects the CFTC’s effort to adapt to the rapidly evolving digital asset landscape, balancing innovation with investor protection and regulatory clarity. Legal experts, however, caution that the proposal may encounter jurisdictional and structural risks. Andrew Rossow, a public affairs attorney, warned that the initiative assumes crypto assets can be classified as commodities, which directly conflicts with the SEC’s position that many qualify as securities under the Howey test. This dichotomy creates legal instability, particularly for tokens that may evolve from commodities to securities through governance changes or protocol upgrades [5].

Rossow highlighted the risk of legal exposure for market participants who comply with CFTC rules in good faith but later face SEC enforcement for unregistered securities transactions. The static nature of regulatory classification, he noted, cannot accommodate the dynamic reality of crypto assets. The CFTC’s plan, while ambitious, may require significant inter-agency coordination and clear asset-by-asset determinations to succeed [5].

The CFTC’s initiative aims to enhance market efficiency, broaden investor access, and reduce fragmentation between spot and futures markets by enabling spot crypto trading on futures platforms. This is expected to create a more cohesive and regulated environment for digital asset trading [6]. As the public comment period approaches its deadline, the CFTC’s ability to implement the proposal will depend on resolving regulatory overlaps and ensuring alignment with broader federal efforts to foster responsible innovation in the digital asset space.

Source: [1] CFTC Explores Letting Futures Exchanges Trade Spot Crypto (https://www.bloomberg.com/news/articles/2025-08-04/cftc-explores-letting-futures-exchanges-trade-spot-crypto)

[2] CFTC seeks to allow spot crypto trading on registered ... (https://cointelegraph.com/news/cftc-spot-crypto-contracts-trading-initiative)

[3] CFTC Launches Crypto Sprint to Enable Spot Trading on ... (https://www.ainvest.com/news/cftc-launches-crypto-sprint-enable-spot-trading-futures-platforms-2508/)

[4] CFTC to Allow Spot Crypto Trading on Registered ... (https://www.bitget.com/news/detail/12560604895334)

[5] CFTC 'Crypto Sprint' With SEC To Implement Trump Plans (https://cointelegraph.com/news/cftc-crypto-sprint-sec-white-house-plans)

[6] US CFTC Explores Allowing Registered Futures ... (https://www.binance.com/en/square/post/27880255499658)