On September 2, the staff of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) issued a Joint Staff Statement regarding the listing of leveraged, margined, or financed spot retail commodity transactions on digital assets. Specifically, the SEC’s Division of Trading and Markets and the CFTC’s Division of Market Oversight and Division of Clearing and Risk shared their view that “current law does not prohibit” SEC- or CFTC-registered exchanges from facilitating trading of those spot crypto asset products.

The Divisions also committed to “promptly review filings and requests” by CFTC-registered designated contract markets (DCMs), CFTC-registered foreign boards of trade (FBOTs) and SEC-registered national securities exchanges (NSEs) seeking to facilitate trading of those products.

The Divisions stated their views on a number of additional regulatory matters impacting market participants, including:

  • Clearinghouses are permitted to partner with custodians to maintain customer accounts;
  • Sharing reference pricing venues among NSEs, DCMs, and FBOTs enhances market surveillance;
  • Public dissemination of transaction data by NSEs and DCMs provides valuable information to the public;
  • Efficient executions and transparency foster trading opportunities and competition among market participants; and
  • The Divisions are prepared to assist and collaborate with market participants to encourage technological innovation while ensuring investor and customer protections.

SEC Chairman Paul Atkins said the “joint staff statement represents a significant step forward” in drawing crypto innovation back onshore. He also noted that “market participants should have the freedom to choose where they trade spot crypto assets. The SEC is committed to working with the CFTC to ensure that our regulatory frameworks support innovation and competition in these rapidly evolving markets.”

“Under the prior administration, our agencies sent mixed signals about regulation and compliance in digital asset markets, but the message was clear: innovation was not welcome. That chapter is over,” said CFTC Acting Chairman Caroline D. Pham. She also remarked that the “joint agency statement is the latest demonstration of our mutual objective of supporting growth and development in these markets, but it will not be the last.”

As a reflection of the SEC’s Project Crypto and the CFTC’s Crypto Sprint, the SEC’s Division of Trading and Markets and the CFTC’s Division of Market Oversight and Division of Clearing and Risk are coordinating efforts to facilitate the trading of certain spot crypto asset products on registered exchanges.

Our Take

This cross-agency guidance and invitation for engagement should be welcomed changes for market participants and is specifically intended to build on the recommendation of President Trump’s Working Group on Digital Asset Markets report on “Strengthening American Leadership in Digital Financial Technology” that the agencies use their existing authorities to promote regulatory clarity to keep blockchain-based innovation within the United States. Of course, the joint statement merely expresses the views of the Divisions’ staff and is not official guidance or a statement of the SEC or the CFTC and, accordingly, has no legal force or effect.

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Photo of Akshay Belani Akshay Belani

Akshay is a practical, commercially focused attorney who advises asset managers and other institutional market participants with respect to the trading and regulation of securities, over-the-counter and exchange-traded derivatives, and structured products.

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Photo of Jay Dubow Jay Dubow

Jay co-leads the firm’s Securities Investigations + Enforcement Practice Group. He focuses his practice on complex business litigation, with a special emphasis on defending against shareholder derivative and securities class action litigation. He also represents clients involved in investigations by the U.S. Securities…

Jay co-leads the firm’s Securities Investigations + Enforcement Practice Group. He focuses his practice on complex business litigation, with a special emphasis on defending against shareholder derivative and securities class action litigation. He also represents clients involved in investigations by the U.S. Securities and Exchange Commission (SEC), the Pennsylvania Department of Banking and Securities, and various self-regulatory organizations, including the Financial Industry Regulatory Authority, Inc. (FINRA). He also conducts internal investigations on behalf of clients. Such investigations have included allegations involving the Foreign Corrupt Practices Act (FCPA), whistle blower claims, financial fraud, and civil and criminal violations of various federal and state laws.

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Photo of Genna Garver Genna Garver

Genna provides targeted, practical advice to investment advisers and their proprietary private investment funds. She represents institutional investors, funds of funds and family offices in connection with their private fund investments. Genna routinely advises clients on formation and offering matters for both domestic…

Genna provides targeted, practical advice to investment advisers and their proprietary private investment funds. She represents institutional investors, funds of funds and family offices in connection with their private fund investments. Genna routinely advises clients on formation and offering matters for both domestic and offshore funds; SEC and state investment adviser, broker-dealer and private fund regulation; Investment Advisers Act compliance programs, annual reviews and ongoing compliance matters; and regulatory examinations and investigations.

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Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their

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Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their business cycle.

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Photo of Ghillaine Reid Ghillaine Reid

Ghillaine co-leads the Securities Investigations + Enforcement Practice Group at Troutman Pepper. She focuses her practice on government and securities regulatory investigations, financial services litigation, commercial litigation, and corporate compliance. Drawing on her experience in government service and private practice, Ghillaine regularly represents…

Ghillaine co-leads the Securities Investigations + Enforcement Practice Group at Troutman Pepper. She focuses her practice on government and securities regulatory investigations, financial services litigation, commercial litigation, and corporate compliance. Drawing on her experience in government service and private practice, Ghillaine regularly represents corporations and individuals in investigations conducted by the Securities & Exchange Commission, the Department of Justice, the Financial Industry Regulatory Authority, and other government and regulatory agencies. Ghillaine has successfully defended several high profile SEC investigations and enforcement proceedings involving a wide range of significant issues, including insider trading, accounting fraud, market manipulation, and broker-dealer sales practice violations. Prior to entering private practice, Ghillaine was a Branch Chief and Staff Attorney in the New York Regional Office of the Securities & Exchange Commission’s Division of Enforcement, where she investigated and litigated a wide range of securities enforcement matters.

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