The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) outlined a plan for harmonizing regulatory approaches to crypto assets and other novel or innovative financial products.
In a joint statement, the agencies acknowledged gaps and duplications in their oversight duties with respect to securities and non-securities, created by their differing statutory mandates, which can hinder product development and investor confidence. Moving forward, their stated intent is to take measures to improve clarity and predictability for innovators while preserving investor protections and market integrity.
Through their combined efforts, the agencies are seeking to reduce market fragmentation with respect to digital assets, address regulatory uncertainty and keep novel financial products within U.S. markets rather than pushing them offshore, as often occurs with “perpetual contracts,” defined as derivatives without a defined expiration date.
“As detailed by the President’s Working Group (PWG) on Digital Asset Markets Report on Strengthening American Leadership in Digital Financial Technology, we are committed to using our existing authorities to establish fit-for-purpose regulations for innovative products and trading platforms,” the agencies said. “The United States has long been the home of financial innovation, but recently, novel products have been driven overseas by fragmented oversight and legal uncertainty. The SEC and the CFTC should encourage the reversal of this trend by harmonizing their approaches to product offerings, enabling increased market choice, and protecting investors through clear, predictable, and pro-innovation regulatory frameworks.”
The agencies plan to hold a roundtable near the end of September to discuss priorities for aligning product and venue definitions, standardizing reporting and data requirements, coordinating margin and capital rules and creating safe harbors through existing exemptive authorities.
Key areas of focus for the roundtable will include:
- 24/7 trading: Examining the feasibility of expanded trading hours to reflect the global, continuous nature of crypto and other asset markets.
- Event contracts: Clarifying regulatory treatment of prediction market products, including those tied to securities.
- Perpetual contracts: Developing a pathway to allow U.S. trading of crypto-linked derivatives without expiration, which are currently only offered overseas.
- Portfolio margining: Coordinating rules to reduce collateral inefficiencies across SEC- and CFTC-regulated products, freeing capital and lowering barriers to cross-market strategies.
- Innovation exemptions and DeFi: Exploring temporary exemptions to support decentralized finance models, including peer-to-peer trading and self-custody of assets.
To help guide the agencies’ efforts to harmonize their regulatory approaches toward digital assets and other novel financial products, they announced a joint SEC-CFTC roundtable on the topic to be held on Sept. 29. The joint statement does not disclose the location of the roundtable or who will be invited to participate.