The Division of Trading and Markets of the U.S. Securities and Exchange Commission (SEC) and the Division of Market Oversight and Division of Clearing and Risk of the U.S. Commodity Futures Trading Commission (CFTC) announced an interagency initiative to further advance the SEC’s Project Crypto and the CFTC’s Crypto Sprint, coordinating efforts regarding the process of enabling trading of certain spot crypto asset products.

The report by the President’s Working Group on Financial Markets titled “Enhancing U.S. Leadership in Digital Asset Technologies” (referred to as the “PWG Report”) recommended that the U.S. SEC and CFTC should coordinate to make the United States the best place in the world for innovation and participation in the crypto asset market using blockchain technology. Specifically, the PWG Report suggested that the two agencies should leverage existing authorities to promote “regulatory clarity to maximize blockchain-based innovation within the United States.” As part of this effort, the two divisions are coordinating the release of guidance on “the listing of leveraged, margined, or financed retail digital asset commodity products for trading” to implement the recommendations of the PWG Report.

This joint statement reflects the view of the two divisions that current laws do not prohibit exchanges registered with the SEC or CFTC from facilitating trading of these spot crypto asset products. As stated in the PWG Report, interagency coordination will promote choice and optionality for market participants in trading venues within the United States. To achieve these goals, the two divisions stand ready to support their respective agencies in considering exchange trading of certain spot crypto asset products.

Spot Commodities

Unless an exception or other appropriate relief applies, the Commodity Exchange Act (CEA) requires that certain leveraged, margined, or financed “retail commodity transactions” be conducted on a designated contract market (DCM) registered with the CFTC or a foreign board of trade (FBOT) registered with the CFTC. One such exception is for retail commodity transactions listed on a national securities exchange (NSE) registered with the SEC. The two divisions stated today that DCMs, FBOTs, and NSEs are not prohibited from facilitating trading of certain spot crypto asset products. Market participants may communicate with SEC or CFTC staff as needed.

Considerations for Market Participants

The divisions will promptly review applications and requests from DCMs, FBOTs, and NSEs to facilitate trading of certain spot crypto asset products. The divisions stand ready to address any questions as market participants prepare to submit any necessary registrations, proposals, or requests for appropriate relief to the SEC and/or CFTC. The following considerations are relevant to market participants seeking to operate markets and trade spot crypto asset products:

Margin, Clearing, and Settlement: The divisions believe that applicable rules allow clearinghouses to work with custodians to maintain customer accounts.

The SEC’s Division of Trading and Markets stands ready to address questions from SEC-registered clearing agencies seeking to participate.

The CFTC’s Division of Clearing and Risk stands ready to address questions from CFTC-registered derivatives clearing organizations (DCOs).

The divisions stand ready to address any regulatory issues related to business relationships between DCOs and NSEs.

Underlying Market Surveillance: The divisions believe that reference price platforms shared by national securities exchanges (NSEs), designated contract markets (DCMs), and foreign boards of trade (FBOTs) can enhance the effectiveness of market surveillance. The divisions stand ready to address any questions related to effective information sharing.

Public Dissemination of Trading Data: The divisions believe that public dissemination of trading data from national securities exchanges (NSEs) and designated contract markets (DCMs) can provide valuable data to the public. The divisions stand ready to address any questions regarding the provision of NSE and DCM spot crypto asset market data to the public.

Promoting Fair and Orderly Markets: The divisions believe that efficient execution and transparency can promote trading opportunities and foster competition among market participants. The divisions are prepared to work with trading venues to uphold the principles of fair and orderly markets while striving to operate markets for participants to trade spot crypto asset products.

Innovation in Investor and Customer Protection: The divisions stand ready to work with market participants to encourage technological innovation in markets and trading while ensuring investor and customer protection.

SEC Chairman Paul Atkins stated, “Today’s joint statement represents a significant step toward bringing innovation in the crypto asset market back to the United States. Market participants should be free to choose where to trade spot crypto assets. The SEC is committed to working with the CFTC to ensure our regulatory framework can support innovation and competition in these rapidly evolving markets.”

“Under the previous administration, our two agencies sent mixed signals regarding the regulation and compliance of digital asset markets, but the message was clear: innovation was not welcome. That era is over,” said CFTC Acting Chairman Caroline D. Pham. “Through collaboration, we can empower U.S. innovation in these markets and build on President Trump’s cooperative approach to further establish the United States as the world’s crypto capital. Today’s joint statement is the latest embodiment of our shared goal to support the growth and development of these markets, but it will certainly not be the last.”

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. This initiative is part of the SEC’s Project Crypto and the CFTC’s Crypto Sprint and is based on the recommendations in the report by the President’s Working Group on Financial Markets titled “Enhancing U.S. Leadership in Digital Asset Technologies.”

The divisions stand ready to communicate with market participants and support their respective agencies in considering the exchange trading of certain spot crypto asset products. Market participants are welcome to communicate with SEC or CFTC staff to discuss any questions or concerns they may have.