New Regulatory Frameworks Proposed by SEC and CFTC to Transform Crypto Landscape

The U.S. Commodity Futures Trading Commission (CFTC) has initiated a drive to legalize spot cryptocurrency trading on registered exchanges. Meanwhile, the U.S. Securities and Exchange Commission (SEC) has updated its guidance regarding accounting rules for stablecoins.

This initiative pertains to contracts that mirror the spot prices of cryptocurrencies but are traded on registered derivative markets (DCM). Acting CFTC Chair Caroline Pham described it as a straightforward approach to establish federal regulations for spot trading of digital assets.

The CFTC has opened a public comment period for its initiative, aiming to clarify the application of Section 2(c)(2)(D) of the Commodity Exchange Act, which addresses retail transactions involving leverage or margin. Furthermore, the commission is soliciting input regarding Part 40 of its rules, which govern DCM operations.

The CFTC is also interested in potential implications for securities laws, such as how SEC regulations might apply to trading assets that qualify as investment contracts.

Comments will be accepted until August 18.

This initiative is part of a program aligned with the recommendations of the Digital Asset Market Working Group established during Donald Trump’s administration. These recommendations include providing a clearer definition of cryptocurrencies as commodities and developing regulations for participants in the DeFi market.

The new guidance allows U.S. dollar-pegged «stablecoins» to be classified as cash equivalents, provided they have a guaranteed redemption mechanism and a stable value backed by another asset class.

This effort is part of SEC Chair Gary Gensler’s ongoing initiatives to streamline regulation. Last week, he unveiled Project Crypto, aimed at modernizing securities rules and facilitating the transition of U.S. financial markets to blockchain technology.

Analysts at Bernstein have termed the initiative «revolutionary,» suggesting that it could transform the U.S. into a global hub for blockchain finance.

Trump is expected to sign an executive order mandating regulators to investigate instances of banks debanking cryptocurrency firms, according to a draft document reported by the Wall Street Journal.

The order will require regulators to assess whether financial institutions adhere to laws regarding fair lending, consumer rights, and antitrust regulations. Institutions found in violation could face fines or lawsuits.

Regulators will also need to repeal any rules that may have contributed to banks refusing service to certain clients. Potential violations could be forwarded to the Justice Department for further action.

Representatives from the crypto industry have long claimed that the Biden administration pressured banks through regulators to sever ties with the sector. This phenomenon has been dubbed Operation Choke Point 2.0.

The order will also address alleged instances of politically motivated service refusals, particularly concerning conservatives.

According to the Wall Street Journal, Trump may sign the document this week, although the White House’s plans could change.

In July, the president signed the GENIUS Act, which sets rules for stablecoins and represents the first significant regulatory measure for the crypto industry in the country.