U.S. Financial Market Modernization and Crypto Integration: A New Era for Institutional and Retail Investors

The U.S. financial system is undergoing a seismic shift as regulators, institutions, and crypto-native firms align to redefine market infrastructure. At the heart of this transformation are three pillars: 24/7 trading, perpetual contracts, and DeFi exemptions, all of which are reshaping how investors—both institutional and retail—allocate capital and manage risk. These developments, driven by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), are not merely incremental adjustments but foundational reconfigurations of market dynamics.

The Case for 24/7 Trading: Liquidity and Capital Efficiency

The push for 24/7 trading is a direct response to the global nature of crypto markets, where volatility and liquidity operate without time zones. According to a joint statement by SEC Chairman Paul Atkins and CFTC Acting Chair Caroline Pham, the agencies are exploring expanded trading hours to mirror the “always-on” nature of digital assets [1]. This shift is particularly advantageous for institutional investors, who can now hedge cross-border exposures in real time. For example, portfolio margining reforms—streamlining collateral requirements across SEC- and CFTC-regulated entities—reduce capital inefficiencies by allowing netting of offsetting positions [1]. This means a hedge fund managing both equities and crypto derivatives can free up balance sheet capacity, lowering the cost of carrying hedged positions.

Retail investors, too, benefit from 24/7 access. Platforms like Coinbase have already introduced perpetual-style futures trading in the U.S., aligning with global benchmarks and enabling retail traders to capitalize on price swings at any hour [3]. The result is a more liquid, responsive market structure that mirrors the crypto-native world.

Perpetual Contracts: Bridging the Onshore-Offshore Divide

Perpetual contracts—derivatives without expiry dates—have long been a staple of offshore crypto exchanges. The SEC and CFTC’s proposal to onshore these instruments marks a strategic pivot to capture economic activity currently flowing to foreign platforms [1]. By introducing transparent leverage limits and robust risk management frameworks, U.S. regulators aim to make perpetuals accessible while mitigating systemic risks. For institutional investors, this means new tools for managing exposure to volatile assets like Bitcoin and Ethereum. For example, a pension fund could use perpetual contracts to hedge against crypto price swings without the complexity of traditional futures.

Retail investors, meanwhile, gain access to products previously reserved for sophisticated offshore traders. As noted in a report by The Block, the onshoring of perpetuals could democratize access to leveraged trading, though it also raises concerns about retail overexposure [3].

DeFi Exemptions: A Regulatory Green Light for Innovation

Decentralized finance (DeFi) has long been stifled by regulatory ambiguity. The SEC’s proposed “innovation exemptions” for peer-to-peer trading of spot crypto assets and derivatives on decentralized platforms could change this [1]. These exemptions would allow protocols like Uniswap and Aave to operate without registering as traditional broker-dealers, reducing compliance burdens and fostering innovation. For institutional investors, this means access to automated market makers (AMMs) and liquidity pools with clearer legal boundaries. For retail users, it could mean lower fees and faster execution times, as DeFi protocols bypass intermediaries.

The President’s Working Group on Digital Asset Markets has further endorsed this approach, recommending legislative actions to support DeFi’s growth [2]. This regulatory clarity is critical for firms like Robinhood, which has already integrated tokenized stock trading on Ethereum, blurring the lines between traditional and digital finance [5].

Super-Apps: The Rise of Unified Financial Ecosystems

The concept of a “super-app”—a single platform offering trading, staking, lending, and custody services—is gaining traction as regulators streamline licensing frameworks. The SEC’s Project Crypto initiative, launched in July 2025, envisions a future where broker-dealers can offer a broad range of services under one license [4]. This reduces the “regulatory duplication” that has historically fragmented U.S. markets.

Coinbase and Robinhood are leading this charge. Coinbase’s Base chain, for instance, aims to unify exchanges, wallets, and application-layer services, positioning the firm as a modern-day Schwab or Morgan Stanley in the on-chain era [5]. Robinhood’s acquisition of Bitstamp and its tokenized stock offerings exemplify the super-app model’s potential to aggregate financial services [5]. For investors, this means fewer platform switches and a more seamless experience, from staking ETH to trading tokenized equities.

Investor Behavior in a Unified Market

The convergence of these innovations is reshaping investor behavior. Institutional players are increasingly treating blockchain ecosystems as long-term investments rather than speculative assets. For example, SUI Group Holdings has adopted a strategy of staking SUI tokens to generate yield while maintaining a cash reserve for strategic flexibility [6]. This reflects a broader shift toward treating digital assets as infrastructure rather than mere speculation.

Retail investors, meanwhile, are embracing DeFi for yield generation. Platforms like Aave and Uniswap now offer automated strategies that reduce exposure to impermanent loss, attracting a new wave of users [3]. The rise of “self-custody” and tokenized securities further empowers retail investors to control their assets without relying on traditional custodians [2].

The Road Ahead: Risks and Opportunities

While the regulatory tailwinds are strong, challenges remain. Critics warn that 24/7 trading and perpetual contracts could amplify market volatility, particularly for retail investors. Similarly, the super-app model’s concentration of services raises concerns about systemic risk if a platform fails. However, the SEC’s emphasis on “compliance by design”—such as embedding KYC/AML protocols into token standards like ERC-3643—suggests regulators are aware of these risks [5].

For investors, the key takeaway is adaptability. Institutions must integrate cross-market strategies that leverage 24/7 liquidity and perpetual contracts, while retail investors should prioritize education to navigate the complexities of DeFi and super-apps. As the U.S. financial system modernizes, those who embrace these changes will find themselves at the forefront of a new era in global finance.

Source:
[1] Joint Statement from the Chairman of the SEC and Acting Chairman of the CFTC [https://www.cftc.gov/PressRoom/SpeechesTestimony/phamatkinsstatement090525]
[2] President's Working Group on Digital Asset Markets releases its report: Strengthening American Leadership in Digital Financial Technology [https://www.eversheds-sutherland.com/en/united-states/insights/presidents-working-group-on-digital-asset-markets-releases-its-report-strengthening]
[3] SEC, CFTC seek to 'harmonize' on DeFi, perps contracts [https://www.theblock.co/post/369625/sec-cftc-seek-to-harmonize-on-defi-perps-contracts-and-more-plan-roundtable-later-this-month]
[4] SEC's “Project Crypto:” A Step Toward On-Chain Financial Markets [https://www.consumerfinancialserviceslawmonitor.com/2025/08/secs-project-crypto-a-step-toward-on-chain-financial-markets/]
[5] Coinbase To Enable 24/7 And Perpetual-Style Futures Trading In The US [https://www.crowdfundinsider.com/2025/07/243805-coinbase-to-enable-24-7-and-perpetual-style-futures-trading-in-the-us/]
[6] SUI Holdings Million: How Institutional Strategies Are Reshaping the Global Economy [https://www.okx.com/learn/sui-holdings-million-strategies-blockchain]