Original Article Title: "US SEC, CFTC Join Forces for the First Time: US Crypto Regulation Shifts Comprehensive, Opening Perpetual Contracts and 24/7 Trading"

Original Article Author: Wenser, Odaily Planet Daily

On September 5, the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly issued two major statements.

One statement mentioned increasing collaboration to support the development of cryptocurrency assets, DeFi, prediction markets, perpetual contracts, and portfolio margin in regulatory rule coordination, narrowing regulatory gaps, extending trading hours, and utilizing innovative exemption measures to enhance the competitiveness of the US market. The other statement previewed that the two parties will hold a joint roundtable on September 29 to discuss topics including "considering coordinating product and venue definitions, simplifying reporting and data standards, adjusting capital and profit frameworks, and using each agency's existing exemption authority to establish coordinated innovative exemptions."

As two crucial regulatory bodies in the US economic system, this move by the US SEC and CFTC may indicate a new wave of US crypto regulation, and Odaily Planet Daily will provide a brief analysis of this event and its implications in this article.

US SEC & CFTC Joint Regulatory Core Goal: Make American Capital Great Again

In the two statements jointly issued by the US SEC and CFTC, both mentioned "ensuring the US's leading position in the global capital markets," indicating that the core goal of this joint regulation is still part of the Trump administration's "America First" policy. Specifically, the main impacts of the joint regulation are reflected in the following aspects:

1. Opening the US Market to Crypto Exchanges

Based on previous information and the joint statements of the two agencies, the US CFTC plans to issue guidance on "clear foreign trading platform registration rules," the prediction market Polymarket has obtained CFTC approval to return to the US market, and the US SEC and CFTC will explore introducing perpetual contracts to the US market, allowing traders to participate on domestic platforms in products that were previously mainly available overseas. At the same time, both parties plan to explore 24/7 markets, prediction markets, portfolio margin optimization, and DeFi innovative exemptions.

Undoubtedly, following Trump taking office, the US government has reversed its previous "closed-door" stance on the cryptocurrency industry and plans to fully open the US market, attracting numerous cryptocurrency exchanges to participate in building the US crypto-economic system.

2. Further Attracting Overseas Capital Liquidity

The U.S. CFTC's plan to clarify the Foreign Board of Trade (FBOT) registration rules is not only expected to attract industry infrastructure such as trading platforms to the U.S. market, but also to facilitate the massive inflow of funds, capital, and liquidity from U.S. users and global crypto users through this channel; and U.S. market participants, including Gemini, Kraken, and Coinbase, will also leverage this to reach more users and liquidity globally.

As U.S. CFTC Acting Chairman Caroline D. Pham previously stated: "This is a way to bring crypto activity 'back to the U.S.,' which had previously flowed out due to enforcement actions during the Biden administration, while also reaffirming the regulatory framework that has been in place since the 1990s. For U.S. traders, this means legal access to more global liquidity; for the crypto industry, this is another step towards regulatory clarity and a move in line with the Trump administration's 'crypto sprint strategy.'"

3. Reducing Regulatory Costs, Improving Enforcement Efficiency

Under existing U.S. law, the U.S. SEC and CFTC are both financial regulatory bodies, but their authorities come from different sources: the SEC is mainly established and enforces laws based on the Securities Act of 1933 and the Securities Exchange Act of 1934, while the CFTC exists and regulates based on the Commodity Exchange Act (CEA). In other words, the SEC primarily regulates the securities market, emphasizing investor protection and disclosure requirements, with penalties including civil fines, injunctions, and criminal referrals; while the CFTC focuses on the commodity futures and derivatives markets, with an emphasis on risk management and anti-manipulation, often involving leveraged trading and high-risk derivatives. Joint regulation will further clarify the boundaries of power between the two parties, reduce regulatory cost burdens on crypto platforms (such as margin capital lock-up), and improve enforcement efficiency—referred to as "Render to Caesar the things that are Caesar's, and to God the things that are God's."

4. Encouraging Innovation While Strengthening Risk Management

The introduction of multiple potential policies and favorable measures will further encourage innovative development of U.S. domestic crypto companies, especially with innovations such as 24/7 trading, portfolio margining, and DeFi exemptions, which are expected to inject new momentum into DeFi's development in the U.S. financial sector. In addition, the two departments emphasized "compliance with investor and customer protection standards," and subsequent policies may be introduced to further enhance risk management and reduce market manipulation. In the long run, this move may effectively reduce the occurrence of price manipulation speculative events in the current disorderly crypto market.

After Crypto IPO Boom, Crypto Derivatives Could Become U.S. Innovation Epicenter

Following landmark IPO events in the crypto industry such as "crypto asset management giant" Galaxy, "first stablecoin stock" Circle, and crypto trading platform Bullish, with a joint regulatory statement issued by the U.S. SEC and CFTC, crypto derivatives and DeFi may become the next U.S. crypto innovation epicenter.

In the past, due to the restrictive regulatory environment in the U.S., many cryptocurrency exchanges and projects have steered clear of the U.S. user market. However, the joint statement by the U.S. SEC and CFTC signals a new round of regulatory direction: encouraging rapid development, fostering a thriving U.S. crypto financial market, and introducing more innovative products that meet exemption requirements based on risk management and investor protection.

On one hand, "U.S.-based crypto projects" such as WLFI, Uniswap, Solana, Moonpay may enter a new phase of expansion and benefit from favorable regulatory policies;

On the other hand, Coinbase, Gemini, Kraken, Kalshi, Polymarket, as well as Bitcoin spot ETFs, Ethereum spot ETFs, and other cryptocurrency index funds and related assets will see a more active trader base and a new wave of liquidity.

It is worth mentioning that this joint regulation may open up possibilities for the U.S. financial market to leverage the crypto economy to activate traditional market liquidity. Traditional fund institutions such as traditional index funds, state pension funds, university endowments, and others are expected to allocate more assets to cryptocurrencies.

In addition, considering Nasdaq's recent announcement of tightening regulations regarding listed companies establishing cryptocurrency reserves, achieving the "best of both worlds" effect solely through a "hodl" strategy in reverse merger-listed companies has become increasingly difficult. The hope now lies in more standardized and innovative crypto financial product innovation and liquidity introduction.

Furthermore, although "BTC hodling pioneer stock" Strategy meets all the strict criteria for S&P 500 inclusion, it has not been selected as an S&P 500 constituent. However, the previous CFTC Acting Chair Caroline Pham has described this as the "Uberization process of Bitcoin," indicating that the integration of digital assets into the U.S. economy is irremovable, highlighting the U.S. CFTC's emphasis on crypto concept stocks.

Unlike the internet economy that has permeated all aspects of people's lives, the cryptocurrency industry currently remains focused solely on financial investment. However, as different tracks such as PayFi, DeFi, prediction markets, and tokenized U.S. stock markets develop, the crypto economy will further advance in mainstreaming on the basis of ETF funds.

Additional Key Dates Related to the CFTC Regulatory Actions:

On August 21, acting CFTC Chair Caroline D. Pham announced that the CFTC would kick off the next phase of its crypto sprint to implement the recommendations from the President's Working Group on Financial Markets’ report. This initiative focuses on advancing federal-level regulation of digital asset spot markets, coordinating with the SEC’s "Crypto Project" activities, in response to President Trump's call to position the U.S. as a leader in crypto.

On September 5, the CFTC and SEC jointly issued a statement outlining their intent to advance unified regulation of crypto and derivatives.

On September 29, a joint CFTC and SEC roundtable will be held at the SEC’s headquarters on 100 NE F Street, Washington, D.C., with in-person attendance open to the public and simultaneous live webcast on the SEC website; the roundtable recording will be subsequently posted on the SEC's official website, and the agenda and participant details can be found here.

According to prior remarks by acting CFTC Chair Caroline D. Pham, the CFTC will extensively seek input from stakeholders on topics such as leverage, margin, and retail financed transactions, and will open a public comment period until October 20.

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