Regulators Clear Path for Global Crypto Liquidity to Flow Into U.S. Markets

Offshore crypto platforms are now legally permitted to return to the U.S. market following new guidance issued by the Commodity Futures Trading Commission (CFTC). The advisory, released on August 28, clarifies the foreign board of trade (FBOT) registration framework for non-U.S. exchanges, enabling them to provide direct market access to American traders while remaining under U.S. regulatory oversight. This move marks a significant shift in U.S. policy, particularly under the Trump administration, which has prioritized clarity and stability in the fast-evolving crypto and derivatives markets [1].

The CFTC’s advisory reaffirms a regulatory framework that has existed since the 1990s but has been clouded in recent years by uncertainty and inconsistent enforcement. The guidance now clarifies that non-U.S. exchanges only need to register as FBOTs to operate legally in the U.S., without the need to register as designated contract markets (DCMs), which had been a point of contention among global exchanges. The framework applies to all asset classes, including traditional derivatives and digital assets, and allows offshore platforms to operate within U.S. regulations, provided they meet supervisory and information-sharing requirements [1].

Acting CFTC Chairman Caroline D. Pham emphasized that the advisory aims to restore clarity and create a legal path for global trading venues to return to U.S. markets. She highlighted that American traders can now access these platforms “efficiently and safely” under CFTC regulations, which ensures market integrity and investor protection. The advisory also signals a broader effort to integrate global liquidity pools into U.S. markets while maintaining regulatory control [1].

The regulatory update extends to crypto and derivatives trading, allowing registered FBOTs to offer access to U.S. participants, such as proprietary traders and intermediaries, including futures commission merchants. All transactions must be cleared by CFTC-registered entities or by exempt firms that comply with customer protection standards. This ensures that U.S. trading activity remains under the agency’s oversight while allowing for greater access to international markets [1].

The advisory aligns with President Donald Trump’s broader “crypto sprint” initiative, which seeks to establish clear rules for crypto commodities, decentralized finance, and blockchain-based derivatives. This regulatory shift marks a departure from the enforcement-focused approach under the previous administration, which saw several high-profile cases against crypto platforms, including a 2023 case against Binance for failing to register as a DCM. The Trump-era CFTC has instead focused on formalizing rules and improving oversight through tools like Nasdaq’s market surveillance technology [1].

The new guidance is seen as an attempt to balance innovation with regulatory protections as the global adoption of cryptocurrencies continues to grow. By providing clarity to foreign exchanges, the CFTC is encouraging a more stable and transparent environment for U.S. traders to engage with global crypto markets. At the same time, the agency is reinforcing its commitment to enforcing standards that protect investors and maintain market integrity [1].

Source:

[1] CFTC Issues New FBOT Guidance for Foreign Crypto Exchanges (https://www.xt.com/en/blog/post/cftc-issues-new-fbot-guidance-for-foreign-crypto-exchanges)