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The recent Commodity Futures Trading Commission (CFTC) advisory concerning offshore exchanges catering to US residents under the Foreign Board of Trade (FBOT) structure will not bring offshore crypto exchanges back to the US, as stated by Eli Cohen, chief legal officer at real-world asset (RWA) tokenization firm Centrifuge.
Cohen informed Cointelegraph that settlement, clearing, and other regulatory obligations designed for the conventional financial system, necessary to serve US clients under the FBOT framework, are not customized for crypto exchanges and will be challenging or unfeasible to meet.
The CFTC’s guidance additionally indicated that only Licensed Futures Commission (FCM) exchanges, which act as broker-dealers for futures contracts, and other rigorously regulated entities, are eligible to apply under the FBOT framework, Cohen noted. He added:
“The primary issue is that only regulated exchanges beyond the United States can apply for the FBOT. Thus, a regulatory framework must exist in your home country.”
Numerous exchanges opt to establish operations in Seychelles or other unregulated territories to circumvent such a framework altogether, Cohen remarked.
The optimal method to provide clarity for crypto exchanges is to enact a crypto market structure bill in Congress, embedding crypto regulations into law, and creating enduring change that does not vary with administrations, Cohen asserted.
Related: ‘Too few guardrails,’ CFTC’s Johnson cautions on prediction market hazards
CFTC’s “crypto sprint” promises clarity on regulations and a transformation of the financial system
The CFTC’s “crypto sprint” represents an initiative to revamp crypto regulations to advance US president Donald Trump’s objective of positioning the US as the worldwide leader in crypto.
A number of policy suggestions were introduced in the Trump administration’s crypto report, published in July, which included granting the Securities and Exchange Commission (SEC) and the CFTC joint oversight over crypto.
Both regulatory bodies have suggested various collaborative policy measures, including the possibility for financial markets to operate continuously, establishing a 24/7 trading cycle across asset classes.
The proposed alteration would be a notable shift from traditional financial markets, which presently do not function during nights or weekends and shut down on specific holidays.
Magazine: Coinbase and Base: Is crypto merely evolving into traditional finance 2.0?
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