SEC and CFTC Propose New Rules for the Crypto Industry

CFTC has launched an initiative to legalize spot trading of cryptocurrencies on registered exchanges. Meanwhile, the SEC updated its guidance on stablecoin accounting rules.

CFTC’s Steps

The focus is on contracts that track the spot price of cryptocurrencies but are traded on registered derivatives markets (DCM). Acting CFTC Chair Caroline Pham described this as a straightforward way to establish federal regulation of spot trading in digital assets.

The Commission has opened a public comment period on the initiative aimed at clarifying the application of Section 2(c)(2)(D) of the Commodity Exchange Act. This section pertains to retail transactions using leverage or margin. The Commission is also gathering opinions on Part 40 of its rules, which govern DCM activities.

The CFTC is also interested in potential implications for securities laws, such as how SEC regulations might apply to trading assets that are investment contracts.

Proposals are being accepted until August 18.

The initiative is part of a program to implement recommendations from the Digital Asset Markets Working Group, established under the Trump administration. These include clearer definitions of cryptocurrencies as commodities and the development of rules for DeFi market participants.

SEC’s Rules

The new guidance allows “stablecoins” pegged to the US dollar to be classified as cash equivalents. For this, stablecoins must have a guaranteed redemption mechanism and a stable value backed by another asset class.

The initiative is part of SEC Chair Paul Atkins’ efforts to simplify regulation. Last week, he introduced Project Crypto. Its goal is to modernize securities rules and facilitate the transition of US financial markets to blockchain.

Analysts at Bernstein called the initiative “revolutionary.” They believe it could transform the US into a global hub for blockchain finance.

Combating Debanking

Trump plans to sign an order requiring regulators to investigate cases of debanking of cryptocurrency companies, writes WSJ citing a draft document.

The order will require regulators to check whether financial institutions have complied with fair lending, consumer protection, and antitrust laws. Violations could result in fines or lawsuits.

Regulators will also need to repeal their own rules that may have contributed to banks refusing service to certain clients. Potential violations could be referred to the Department of Justice for further action.

Representatives of the crypto industry have long claimed that the Biden administration pressured banks through regulators to cut off the sector from the financial system. This phenomenon has been dubbed Operation Choke Point 2.0.

The order will also address alleged cases of service refusal for political reasons, particularly concerning conservatives.

According to WSJ, Trump may sign the document this week, although White House plans could change.

In July, the president signed the GENIUS Act, which sets rules for stablecoins and is the first significant regulatory act for the crypto industry in the country.