The US CFTC officially approves cryptocurrency spot products, reshaping the regulatory landscape from the "crypto sprint" to 2025

Written by: ChandlerZ, Foresight News

On December 4, Caroline D. Pham, Acting Chair of the US Commodity Futures Trading Commission (CFTC), announced that listed spot cryptocurrency products will, for the first time, begin trading on CFTC-registered futures exchanges under federal regulation in the United States.

This move is one of the first items in the “Crypto Sprint” initiative, launched to implement the government’s pro-cryptocurrency policy objectives. Other aspects of the plan include enabling tokenized collateral (including stablecoins) in derivatives markets, and establishing rules for technical amendments to CFTC regulations on collateral, margin, clearing, settlement, reporting, and recordkeeping, to support the use of blockchain technology and market infrastructure (including tokenization) in the marketplace.

Bitnomial will launch the first CFTC-regulated spot cryptocurrency market.

Back in December 2023, the US CFTC approved Bitcoin futures platform Bitnomial to register in the US as a Derivatives Clearing Organization, allowing it to clear margin futures and options contracts. Bitnomial was already approved to operate as a designated contract market, allowing it to list futures and options contracts, while also acting as a futures commission merchant, enabling it to trade with clients.

In October 2024, Bitnomial also sued the US SEC, accusing it of overextending its jurisdiction over digital assets. The case involves CFTC-regulated XRP futures contracts. In its lawsuit, Bitnomial stated that futures fall solely under the CFTC’s jurisdiction, and SEC involvement would significantly increase the company’s regulatory burden.

In November of this year, Caroline Pham confirmed she has been in talks with several CFTC-regulated Designated Contract Markets (DCMs). The list includes CME, Cboe Futures Exchange, ICE Futures Exchange, crypto-native platform Coinbase Derivatives, prediction market Kalshi, and Polymarket US. The discussions involve launching crypto spot trading products with margin, leverage, and financing features.

In an interview, she stated, “While we continue to work with Congress to bring legislative clarity to these markets, we are also utilizing our existing authorities to swiftly implement recommendations from the President’s Working Group on Financial Markets’ report on digital assets.”

Caroline Pham’s Regulatory Approach: From Adjusting Enforcement Mindset to Building Communication Mechanisms

The regulatory shift mentioned above is driven by the approach led by Caroline Pham over the past year. After taking over as acting chair at the beginning of the year, she quickly adjusted the CFTC’s enforcement strategy in the crypto sector. In previous years, the regulatory agency had faced resource allocation issues, with too much effort spent on repeated negotiations with compliant platforms. Caroline emphasized refocusing on core violations such as market fraud and manipulation, and launched a series of reforms to establish clear development paths for compliant projects.

At the policy level, the CFTC’s “Crypto Sprint” plan became the implementation framework. The plan covers everything from listing spot contracts, to integrating tokenized collateral into derivatives clearing systems, to a series of technical amendments around margin, clearing, settlement, and reporting, aiming to establish a clearer federal regulatory framework for crypto assets, especially non-security digital assets.

The core of the plan is to promote compliant trading of spot crypto assets on CFTC-registered futures exchanges (DCMs) and fill long-standing regulatory gaps in market structure, custody, stablecoin regulation, and anti-money laundering standards. By bringing leveraged, margin, or financed crypto trading into the established commodities trading regulatory system, the CFTC seeks to enhance trading transparency, reduce reliance on unlicensed or offshore platforms, and address the long-standing regulatory gray area of the US crypto spot market.

To further strengthen communication between regulators and industry, Pham proposed the establishment of a “CEO Innovation Committee” in November, opening a nomination channel for CEOs in the tech, finance, and crypto sectors. The committee is designed to provide professional input for the CFTC to expand its digital asset regulatory capabilities and improve rules for emerging sectors such as prediction markets, while establishing a stable communication channel between institutions and regulators. In the past, the main complaint from the crypto industry about US regulation was the lack of interaction between policymakers and front-line participants. The emergence of this structure signals that regulation is shifting from one-way enforcement to two-way collaboration, providing a new platform for further regulatory discussion.

The Prototype of the CFTC’s New Market Map

After the greenlight for spot trading, the CFTC’s regulatory approach is gradually taking shape in two model markets. On one end is Bitnomial, taking on the role of a compliant spot market. Within the DCM framework, spot, futures, and options can operate within a unified trading and clearing system, making it easier for traditional financial institutions to access digital assets.

On the other end is the prediction market platform Polymarket. In November, the CFTC approved its amended designation order, allowing it to enter the US market through intermediary channels, provided it meets stricter surveillance systems, clearing procedures, and regulatory reporting requirements. Polymarket stated it has developed more robust surveillance systems, market oversight policies, clearing procedures, and Part 16 regulatory reporting capabilities. Before officially going live, Polymarket will implement additional rules, policies, and procedures applicable to intermediary trading.

According to Bloomberg, Gemini, the crypto exchange founded by Tyler and Cameron Winklevoss, is planning to launch prediction market contracts and enter the prediction market sector. In May, Gemini applied to the US CFTC to establish a Designated Contract Market (DCM) and is considering listing prediction-related derivatives contracts on the platform. The application is still under review.

Bitnomial and Polymarket respectively represent the CFTC’s different visions for the spot market and innovative contracts. Together, they form the prototype of the digital commodity market envisioned by regulators, enabling spot, derivatives, and prediction products to develop in a coordinated manner within a unified framework.

In a previous speech, Caroline also stated that the CFTC is studying whether, under the US cross-border regulatory framework, it can recognize overseas cryptocurrency trading platforms that follow sound, crypto-specific rules (such as the EU’s MiCA framework). This statement follows the CFTC’s recent reaffirmation of its longstanding Foreign Board of Trade (FBOT) framework. This framework allows certain non-US crypto trading platforms already regulated by foreign regulators to register with the CFTC as FBOTs, rather than as Designated Contract Markets (DCMs), thereby providing direct trading access to US traders.

CFTC Nears Becoming the “Primary Regulator” of Digital Commodity Spot Markets

The policy environment in 2025 is making the CFTC’s role increasingly clear. In September, the US SEC and CFTC issued a joint statement, making it clear that exchanges registered with the SEC and CFTC are not prohibited from offering trading in certain spot crypto asset products. This further advances the SEC’s “Project Crypto” and the CFTC’s “Crypto Sprint” plans, and includes discussions on perpetual contracts, 24-hour markets, event contracts, and DeFi innovation exemptions.

Meanwhile, related legislation under discussion in Congress is pushing for a clear division of responsibilities between the SEC and CFTC: security tokens will fall under the SEC, while digital commodities and their spot and derivatives trading will fall under the CFTC. The two agencies are working together to reduce overlapping and missing regulation, aiming to form a more unified federal-level regulatory framework. The plan is currently being gradually improved through public consultations and phased implementation, with the focus on creating an enforceable rules system for digital assets rather than promoting any particular industry.

This is why Trump’s nominee for CFTC chair, Michael Selig, is drawing attention. Michael Selig comes from the SEC’s crypto special task force, where he was the chief advisor, and was previously a partner in Willkie Farr & Gallagher’s asset management practice. He is highly familiar with gray areas at the boundary between securities and commodities, and is now set to lead the CFTC. He is seen as someone who will build on the achievements of “Crypto Sprint” and further upgrade temporary policy arrangements into long-term regulatory design.

Currently, the US Senate Agriculture Committee has approved Michael Selig’s nomination by a vote of 12 to 11, and will send it to the full Senate for a vote. Whether it’s the comprehensive takeover of the spot market or the delineation of responsibilities with the SEC, the new chair is likely to become the key architect in the future restructuring of US crypto market regulation.