Regulators Reopen Doors for Foreign Exchanges to Serve U.S. Traders

The U.S. Commodity Futures Trading Commission (CFTC) has issued a regulatory advisory affirming the legal pathway for non-U.S. exchanges to serve U.S. traders by registering under the Foreign Board of Trade (FBOT) framework. The move, announced on August 28, 2025, by Acting CFTC Chair Caroline Pham, seeks to clarify the regulatory landscape and restore access to deep, liquid global markets for American participants. This advisory reiterates that the FBOT registration, which has been in place since the 1990s, applies to all asset classes, including digital assets, and is not restricted by the legal domicile of the exchange or trader but by their physical presence in the U.S. [1]

The advisory addresses the confusion arising from recent enforcement actions that introduced novel interpretations inconsistent with long-standing CFTC precedent. It reaffirms that non-U.S. exchanges do not need to register as a Designated Contract Market (DCM), a more stringent and complex regulatory framework, to provide services to U.S. traders. Instead, foreign exchanges can register as FBOTs under Part 48 of the CFTC’s regulations, allowing them to offer direct market access to U.S. participants. This shift aims to reintegrate offshore trading platforms into the U.S. market ecosystem while ensuring compliance with U.S. regulatory standards [2].

Pham emphasized that the advisory aligns with broader efforts under the Trump administration to foster a pro-crypto environment, referred to as the “crypto sprint.” She noted that the advisory will enable American companies, including those in the crypto space, to return to the U.S. market after being forced to operate from foreign jurisdictions due to regulatory uncertainty. The CFTC’s decision also underscores a strategic pivot from enforcement-driven approaches to a more innovation-friendly regulatory stance, particularly in the digital asset sector [3].

The advisory also highlights that the CFTC will continue to monitor and enforce market integrity by requiring FBOTs to be overseen by a foreign regulator with sufficient authority to share information and intervene if necessary. This aligns with the goals of the GENIUS Act, which allows the U.S. Treasury Secretary to determine the adequacy of foreign regulatory frameworks for digital assets [4]. By adopting a collaborative and transparent approach, the CFTC aims to create a stable environment where global trading platforms can operate within the U.S. market while maintaining regulatory oversight.

The impact of this advisory could be transformative for both U.S. and international markets. For U.S. traders, it offers greater access to diverse and deeper liquidity pools previously inaccessible due to regulatory restrictions. For foreign exchanges, particularly those in the crypto space such as Binance, it provides a clear and streamlined path to legally serve U.S. clients without the need for separate domestic entities. This could potentially reduce the reliance on offshore trading platforms among U.S. participants and foster increased transparency in the digital asset markets [5].

The advisory also signals the CFTC’s commitment to leveraging technology for enhanced regulatory oversight. In a related development, the agency has deployed Nasdaq’s Market Surveillance platform to strengthen its ability to detect and prevent fraudulent and manipulative trading activities. This move is expected to support the agency’s lean staff in analyzing market trends and identifying unusual trading patterns, ensuring the integrity of U.S. markets as they evolve [4].

Source:

[1] Acting Chairman Pham Announces FBOT Advisory to Provide Regulatory Clarity for Non-U.S. Exchanges (https://www.cftc.gov/PressRoom/PressReleases/9111-25)

[2] CFTC opens door for Web3 exchanges via FBOT registration (https://blockworks.co/news/cftc-fbot-registration)

[3] CFTC Clears Path for US Traders to Access Foreign Crypto ... (https://www.cointribune.com/en/the-cftc-opens-the-way-for-foreign-crypto-exchanges-for-us-traders/)

[4] US opens door to foreign exchanges serving American customers (https://coingeek.com/us-opens-door-to-foreign-exchanges-serving-american-customers/)

[5] CFTC Clears Path for Americans to Trade on Offshore Crypto Exchanges (https://sumsub.com/media/news/cftc-clears-path-for-americans-to-trade-on-offshore-crypto-exchanges/)