US Regulator Pushes for Leveraged Spot Crypto Trading by December
Acting chair of the Commodities Futures Trading Commission, Caroline Pham, is driving the launch of leveraged spot crypto trading as early as next month, having already held direct discussions with regulated exchanges to bring these products to market. This move aims to provide investors with a more regulated and secure environment for trading cryptocurrencies.
Pham’s initiative is part of a broader effort to bring clarity and oversight to the digital asset market. According to Pham, these new products are expected “to begin trading in our markets before the end of the year.” This development is significant, as it will allow investors to trade cryptocurrencies with leverage on regulated U.S. exchanges, providing a more secure and transparent environment compared to offshore platforms.
Regulatory Framework and Investor Protection
Leveraged spot crypto trading enables investors to use borrowed money to increase their exposure to real cryptocurrencies like Bitcoin or Ether. Instead of speculating on future prices through contracts, investors trade the asset itself, providing a fraction of the trade value as margin, with the rest covered by funding from the exchange or broker. Currently, U.S. traders can access leveraged trading through offshore platforms, but these lack the regulatory oversight and investor protections provided by federal agencies.
Pham’s push for leveraged spot crypto trading on regulated U.S. exchanges would allow investors to trade spot assets with leverage under well-defined rules and oversight. This would include institutional oversight, risk management standards, and investor protection. The products would be available on designated contract markets (DCMs), which are federally regulated exchanges authorized to offer commodity trading to U.S. participants.
CFTC’s Efforts and Future Developments
Crypto-native companies with DCM status, such as Coinbase Derivatives and Bitnomial, and other approved trading venues like CME and Cboe Futures Exchange, are expected to quickly introduce leveraged spot offerings once the regulatory pathway is formalized. Pham’s efforts are part of a broader push by the CFTC to provide regulatory clarity for digital assets and encourage the development of the U.S. crypto market.
With the nomination of Mike Selig, a senior SEC official, as the CFTC’s next permanent chairman, Pham is working to ensure a smooth transition. Selig’s appointment is subject to Senate confirmation. Meanwhile, Pham is leveraging existing regulations, such as the Commodity Exchange Act, to accelerate key policy actions and provide a framework for the launch of leveraged spot crypto trading.
The CFTC’s joint guidance with the SEC, released in September, clarified that exchanges registered with either agency are not prohibited from facilitating trading in certain spot commodity products, including cryptocurrencies. This development has been seen as a positive step towards providing regulatory clarity and encouraging innovation in the digital asset market.
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