Congress has long sought to give the Commodity Futures Trading Commission more direct authority over crypto spot markets, but the commission is proceeding without one, and Interim Secretary Caroline Pham is in talks with regulated exchanges to launch spot crypto products as early as next month, according to people with direct knowledge of the plans.
Even during the federal government shutdown, which has slowed crypto policy efforts in Washington, officials said Acting Chairman Pham has been personally meeting with multiple financial platforms interested in listing spot crypto contracts. The CFTC is also considering further guidance on the how-to for this transaction, given Mr. Pham’s public position that the CFTC has sufficient legal authority to approach the market in this way, they said.
Pham (who will eventually be replaced by President Donald Trump’s new nominee, SEC Cryptocurrency Commissioner Mike Selig) has been busy overhauling the CFTC’s internal structure and enforcement division, as well as working on a tokenized collateral policy that is expected to be developed by early next year. But the most pressing policy area for authorities is the oversight of new retail spot products on regulated platforms, in the absence of legislation from Congress.
“We continue to work with Congress to bring legal clarity to these markets, and we are also leveraging existing authorities to quickly implement the recommendations in the Presidential Task Force on Digital Asset Markets report,” Pham said in a statement to CoinDesk. “We are excited about the new products scheduled to begin trading in our markets by the end of the year, and are working to ensure a smooth transition for President Trump’s nominee for the CFTC Standing Chair.”
Spot trading of commodities — instant trading of actual assets rather than futures. In this case, it involves digital asset trading of tokens such as Bitcoin. and the ether of ethereum —This is a major regulatory issue at the center of the industry’s policy lobbying efforts in Washington. Many lawmakers and Pham’s Democratic predecessor at the agency’s top position have argued that Congress needs to give the CFTC oversight powers. If Pham induces CFTC-regulated exchanges to introduce leveraged trading of assets like Bitcoin and Ether, it could overcome some of the legal hurdles and incentivize institutional investors to take a look at cryptocurrencies.
“Being able to access these crypto products in a regulated space with familiar protections may increase the appetite for these institutions and other sophisticated market participants to acquire or expand their exposure to cryptocurrencies because they are available in a place with familiar regulated protections,” Chris Swiatek, a Seward & Kissel attorney who advises asset managers on digital assets, said in an interview.
leverage spot cryptocurrency
Crypto commodity trading involving margin, leverage, or financing takes place in the so-called Designated Contract Market (DCM), under the traditional full regulation of commodity law, and may provide additional assurance to investors and their advisors. With limited trading windows, there is still plenty of room for a final U.S. market structure bill that would further define the crypto spot world and its internal structure.
A spokesperson for the agency declined to identify exchanges that could take the lead, but people familiar with the discussions said DCM, which is already steeped in cryptocurrencies, is expected to be the first to go to market. Some crypto-native companies like Coinbase and Bitnomial hold DCM status, as do prediction market platforms like Kalshi and Polymarket.
“The CFTC’s recent efforts on spot market regulation are particularly encouraging,” said Cody Carbone, CEO of the Digital Chamber of Commerce, which promotes crypto-friendly policy in Washington. “Government agencies, directed by the president’s executive orders and task force recommendations, will need to be strengthened because market structures depend in many ways on whether Congress reinstates government.”
The better-known U.S. Securities and Exchange Commission, which has received most of the attention in the crypto space in recent years due to the regulator’s past aggressive pushback against the industry’s business practices and legal positions, is likely to have jurisdiction over a vast amount of digital asset token trading. Even Paul Atkins, the pro-crypto SEC chairman appointed by President Donald Trump, has suggested that the clear majority of assets in this area are not securities and are effectively beyond the reach of his regulator. This will put the majority of cryptocurrencies in the hands of the CFTC.
However, leaders of the SEC and CFTC recently announced that they are jointly working on new product offerings and have instructed regulatory exchanges that spot trading of certain crypto products is fair trade if done properly in consultation with regulators. Pham is exempt from current restrictions on the activities of federal employees, allowing him to attend meetings and provide direct guidance to private companies, the people said.
Andreessen Horowitz (a16z), a leading investor in crypto projects, told the CFTC in a recent comment letter that the CFTC’s public guidance “represents a significant opportunity to reverse this trend of offshoring by providing U.S. retail investors with access to leveraged spot crypto products within a comprehensive regulatory framework that maintains the high standards of market integrity and investor protection that characterize U.S. derivatives markets.”
stablecoin collateral
Another near-term policy shift by regulators is to allow stablecoins to be used as acceptable tokenized collateral in the vast derivatives market, with a final decision expected by the second quarter of next year, the people said. They said this is likely to begin as a pilot program at U.S. clearinghouses and feature tighter oversight, including additional disclosures on factors such as position size, large traders, and trading volume, as well as increased reporting on operational incidents.
Pham, who has been working on the idea of tokenized collateral for years, called it a “killer app” for stablecoins.
When he took office earlier this year, Pham was among the leaders of federal agencies that saw Elon Musk’s Department of Government Efficiency (DOGE) cut large numbers of employees from the government. Undaunted by her interim status, she also made far-reaching personnel decisions on her own, canceled certain expensive service contracts, and launched policy initiatives such as the so-called “Crypto Sprint.” The cryptocurrency initiative aimed to accelerate the advancement of digital asset policy and meet President Trump’s stated demands. Pham’s internal reorganization includes overhauling the enforcement division, which has focused on cryptocurrency cases in recent years.
Although the internal and external overhaul of the CFTC has caused some turmoil, with large swaths of longtime employees heading into retirement in the wake of the Trump administration’s proposed buyout of federal employees, talent shortages leave room for the agency to restructure key functions. Pham’s aim is to establish a dedicated enforcement unit of about eight or nine trial lawyers, and potentially hire former prosecutors from the Justice Department and other institutions to bring more courtroom experience to the CFTC, people familiar with the matter said.
The agency is particularly interested in expanding its budget by exploring the possibility of hiring legal staff in less expensive areas of the country, such as Kansas City.
In recent months, Pham has discussed his retirement plans with the administration and agreed to stay on until a replacement chairman is confirmed. His term was extended after the president’s first pick, former commissioner Brian Quintenz, was withdrawn amid a public spat with Gemini CEO Tyler Winklevoss, and the Senate continues to struggle with negotiations over the government shutdown that could further delay confirmations.
People close to MoonPay, a U.S.-based cryptocurrency infrastructure services provider, said Pham will join the company as chief legal officer and chief administrative officer upon her retirement, which would see her follow in the footsteps of other former CFTC commissioners entering the digital space. Summer Mersinger, a former Republican committee member during Pham’s tenure, recently resigned to take the helm of the Blockchain Association as CEO. Mr. Quintenz works in policy at a16z Crypto. Former president J. Christopher Giancarlo is a board member of the Digital Chamber and has written a book about himself as “CryptoDad.”
It’s unclear when the Senate could vote to confirm Selig, noting that Carbone is an SEC official who has “spent years working to shape sound digital asset policy in the public and private sectors.” Pham may be planning to make some more changes to the agency.
Amid leadership uncertainty, he struggled in some hiring negotiations earlier this year, but the company is moving ahead with hiring people with decades of experience in the financial sector, typically at the level of running corporate units, to fill leadership roles at the CFTC, the people said.
solo commissioner
In terms of direct work on the committee, she is in the highly unusual position of being the sole member of what is essentially a five-member body. This effectively puts her in a role similar to single-director agencies like the Consumer Financial Protection Bureau or the Office of the Comptroller of the Currency. But while crypto lobbyists and lawyers have privately expressed misgivings about the legal validity of policy decisions made by the sole Republican chair, the Trump administration has deliberately sought to empty federal agencies of opposition input required under federal law.
The only formal cryptocurrency rulemaking currently underway at the CFTC is an effort to amend the agency’s rules to make room for the inclusion of blockchain technology, a technical effort that spans numerous rules across the CFTC’s jurisdictions.
“In the first few months of our administration, we have focused on getting the CFTC back to basics, streamlining its operations, and preparing for expanded oversight in the digital asset space,” Pham said, a move welcomed by crypto companies.
Faryar Shirzad, Coinbase’s chief policy officer, said in an interview with CoinDesk that “we are very pleased that she has moved this important work stream.” He said Pham is “very open to companies like ours to provide input into the agency’s work.”
Sources said she and Selig had been in touch as they prepared for the approval process. Selig is a key staff member of the SEC’s own Project Crypto, which has worked in conjunction with the CFTC, and is widely expected to continue on a similar path on crypto-friendly policies if confirmed by the Senate.
Industry hopes have long been pinned on the concept that large investment funds would wait until the sector was mature and safely regulated. A surge in government support over the past year has contributed to this, but observers of the CFTC’s spot trading initiative suggest this could provide an even bigger boost to confidence.
“There’s a lot of talk about this from traditional companies in general. This gives them an opportunity to compete for business with people who want to access digital assets without necessarily moving away from traditional financial frameworks,” Swiatek said.
He predicted that there will be “a lot of potential movement there” because “ultimately everyone is competing for a piece of this growing ecosystem.”