Regulators Clear Legal Path for Spot Crypto Trading on Exchanges

The U.S. Senate has released an updated draft of its proposed legislation governing the cryptocurrency market, signaling a potential shift in regulatory approach toward digital assets. The revised bill aims to clarify the legal status of spot crypto trading on regulated exchanges, aligning with recent guidance from the staffs of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The joint statement from these agencies, issued on September 2, 2025, affirmed that current law does not prohibit exchanges from facilitating trading in certain spot crypto commodity products, a move that has been widely interpreted as a step toward mainstream acceptance of digital assets within the U.S. regulatory framework.

The Senate’s updated draft reflects a growing consensus among policymakers and regulators that a more structured approach is needed to support innovation while ensuring market integrity and investor protection. The bill builds on initiatives such as the SEC’s “Project Crypto” and the CFTC’s “Crypto Sprint,” both of which have focused on providing clarity for market participants. The Senate’s version of the bill emphasizes the need for a balanced regulatory environment that fosters competition and allows for the development of new crypto trading mechanisms without compromising consumer safeguards.

A key element of the updated draft is its non-binding nature. The joint SEC-CFTC statement is not a new rule or legal safe harbor but rather a staff-level clarification that existing laws do not prohibit regulated exchanges from listing spot crypto products. This distinction is critical for exchanges considering new digital asset offerings, as it means that any proposals must still comply with current regulatory requirements, including SEC or CFTC approval processes. However, the agencies have pledged to expedite the review of such proposals, signaling a more cooperative stance than previously observed.

The proposed legislation also underscores the importance of robust oversight in new crypto markets. The draft includes provisions requiring secure custody arrangements, transparent trade reporting, and effective market surveillance mechanisms. These measures are intended to prevent fraud, market manipulation, and other risks associated with less-regulated digital asset trading. The agencies have also expressed openness to innovative trading frameworks, provided they meet these core regulatory standards. This approach suggests that technological advancements in crypto trading could be accommodated within a well-defined legal structure.

Looking ahead, the updated bill is expected to serve as a foundation for broader regulatory developments in the U.S. crypto market. The SEC and CFTC have indicated that further guidance, including potential rulemaking, will be part of their ongoing efforts to refine the regulatory landscape. Market participants are being encouraged to engage proactively with regulators to influence the final shape of these rules. The Senate’s draft, together with the joint staff statement, marks a significant step toward resolving long-standing ambiguities in crypto market regulation and may pave the way for increased participation from traditional financial institutions in the digital asset space.

Source: [1] SEC and CFTC staff clear path for spot crypto trading on regulated exchanges (https://www.aoshearman.com/en/insights/ao-shearman-on-fintech-and-digital-assets/sec-and-cftc-staff-clear-path-for-spot-crypto-trading-on-regulated-exchanges)