Regulators Let Offshore Crypto Platforms Serve U.S. Traders Again

The Commodity Futures Trading Commission (CFTC) has issued an advisory to clarify the regulatory framework for non-U.S. exchanges seeking to serve American traders, marking a shift toward greater openness for offshore crypto platforms. The advisory, released by the CFTC’s Division of Market Oversight, reaffirms that foreign boards of trade (FBOTs) registered with the CFTC can legally offer trading access to U.S. clients without needing to register as U.S. designated contract markets (DCMs). This move is expected to facilitate the return of crypto firms that previously relocated operations outside the U.S. to comply with stricter regulatory environments. Acting CFTC Chairman Caroline Pham emphasized that the advisory provides clarity for firms seeking to provide U.S. traders with access to global markets, reinforcing the CFTC’s commitment to supporting the Trump administration’s “crypto sprint” initiative aimed at revitalizing the U.S. crypto sector [1].

The advisory clarifies that FBOTs must be rigorously regulated in their home jurisdictions and operate under regimes deemed comparable to U.S. standards. It also reiterates that the CFTC has been receiving increased inquiries from foreign exchanges seeking guidance on how to structure their registration processes. Pham highlighted that since the 1990s, Americans have been permitted to trade on non-U.S. exchanges that are registered as FBOTs, and the updated advisory aims to streamline this process for crypto markets. The guidance does not alter existing policy but serves to eliminate confusion created by recent enforcement actions under the previous administration, which often required crypto platforms to register as DCMs [2].

The shift in approach is part of a broader regulatory overhaul under the Trump administration, which has prioritized fostering a more hospitable environment for crypto innovation. The CFTC has been working to implement policies that align with the administration’s goals, including increasing U.S. competitiveness in the global digital assets market. North America is already the largest crypto market globally, with $1.3 trillion in on-chain value received between July 2023 and June 2024, representing 22.5% of global activity. By enabling offshore platforms to serve U.S. traders more easily, the CFTC is expected to enhance market liquidity and introduce greater competition to major U.S.-based exchanges like Coinbase and Kraken [3].

The advisory also highlights the potential for U.S. traders to access a wider array of products and asset classes through offshore exchanges. However, it emphasizes that any non-U.S. firm seeking to serve U.S. clients must be subject to stringent oversight in their home jurisdictions. The CFTC will review each case individually to ensure compliance with its standards, and prior determinations regarding a jurisdiction’s regulatory equivalency may expedite the process. This approach contrasts with the enforcement-heavy strategies of the prior administration, which led to the departure of several major crypto firms from the U.S. market [4].

The CFTC’s move is seen as a strategic step toward reversing the exodus of crypto companies that occurred during the earlier years of the Biden administration. By promoting a clearer regulatory pathway, the agency aims to encourage firms to return to the U.S. while ensuring market integrity and consumer protection. The advisory is part of the CFTC’s broader effort to create a regulatory environment that supports innovation without compromising safeguards, in line with the administration’s goal of re-establishing American leadership in digital financial technology [5].

Source:

[1] CFTC: Crypto Firms That Left U.S. Can Open Doors Here as ... (https://finance.yahoo.com/news/cftc-crypto-firms-left-u-184618231.html)

[2] CFTC Says Offshore Crypto Firms Have Path to Bringing on ... (https://finance.yahoo.com/news/cftc-says-offshore-crypto-firms-193017428.html)

[3] Acting Chairman Pham Announces FBOT Advisory to ... (https://www.cftc.gov/PressRoom/PressReleases/9111-25)

[4] CFTC provides clarity on US access to foreign crypto ... (https://www.theblock.co/post/368689/cftc-provides-clarity-on-us-access-to-foreign-crypto-exchanges-after-being-driven-out)

[5] CFTC Clears Path to Allow US Citizens to Access Offshore ... (https://cointelegraph.com/news/cftc-pathway-americans-trade-offshore-crypto-exchanges)