- The SEC and CFTC have announced a joint effort to provide regulatory clarity for the crypto market
- The agencies are considering innovation exemptions for DeFi, allowing peer-to-peer trading under defined guardrails
- The SEC and CFTC are working to reverse the trend of crypto innovation moving overseas due to fragmented oversight
On Friday, September 5, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) issued a joint statement emphasizing their coordinated efforts to provide much-needed regulatory clarity for the crypto market. In the statement, SEC Chairman Paul S. Atkins and CFTC Acting Chairman Caroline D. Pham highlighted the importance of their collaboration.
It is a new day at the SEC and the CFTC, and today we begin a long-awaited journey to provide markets the clarity they deserve, the two agencies would work in lockstep to create a robust regulatory framework for market participants, investors, and the wider public.
The statement acknowledged the rapid innovation in the crypto space and emphasized that the work of the agencies has “never been more intertwined.” To further this, the SEC and CFTC announced plans for a roundtable discussion on September 29 to discuss the future of on-chain technology and bring innovative solutions back to the United States.
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Addressing regulatory fragmentation and innovation exemptions
The agencies also acknowledged the fragmented oversight and legal uncertainty that has pushed crypto innovation overseas. In their statement, they highlighted the importance of reversing this trend, noting that the U.S. has long been a leader in financial innovation but has seen novel crypto products move abroad due to inconsistent regulation.
To address these challenges, the SEC and CFTC revealed they are considering “innovation exemptions” for Decentralized Finance (DeFi). These exemptions would allow peer-to-peer trading and other complex market operations to operate under clearly defined regulatory guardrails.
The agencies also referenced their prior work aimed at bringing crypto perpetual contracts back onshore, signaling a continued push for clarity and regulation in this growing sector.
The future of on-chain finance and 24/7 markets
The SEC and CFTC also discussed the potential advantages of on-chain finance and how it could benefit the broader market. The agencies noted that the 24/7 trading model already in place in crypto markets offers valuable insights into how traditional markets could evolve to provide extended trading hours.
With these discussions, the agencies aim to create a more inclusive and dynamic regulatory environment for the growing crypto industry, ensuring that the United States remains a hub for financial innovation.
