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- CFTC to launch leveraged spot crypto trading by next month.
- Talks with major exchanges pave way for regulated crypto trading.
- Pham uses existing laws to push forward with crypto plans.
Caroline Pham, acting chair of the Commodity Futures Trading Commission (CFTC), confirmed that the agency is moving forward with plans to introduce spot crypto trading, including leveraged products, as soon as next month.
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Key Exchanges Involved in Discussions
The report states that Pham has held meetings with other exchanges regulated by CFTC, like CME Group, Cboe Futures Exchange, and ICE Futures. Cryptocurrency-native exchanges, such as Coinbase Derivatives, and prediction markets, such as Kalshi and Polymarket US, are also included in the negotiating parties. These discussions are centered around the introduction of spot crypto trading products with leverage, margin, and financing.
Pham emphasized that the CFTC is building its powers on already established powers under the Commodity Exchange Act. This act compels the trading of commodities on leverage, margin, or financing to be done on regulated exchanges. With this power, the CFTC is attempting to control leveraged spot trading of crypto, despite other crypto-related government regulatory projects being postponed by a government shutdown.
A Shift Toward More Regulated Crypto Trading
The U.S market would be significantly affected by the introduction of leveraged spot trading of crypto. The traders would have the chance to borrow money to increase their holdings in bitcoin and ether. For example, with 5x leverage, a trader could control $5,000 worth of bitcoin with only $1,000 of their own capital.
Although leveraged crypto trading has long been practiced on offshore exchanges, the introduction of such products on regulated platforms of the CFTC would provide institutional controls and investor protections. This change of regulations would change U.S. crypto markets as it would provide more secure trading segments to both institutional and retail traders.
Regulatory Shift and Future Impact
Pham’s initiative marks a new direction in U.S. crypto regulation. Rather than waiting for Congress to grant specific authority over spot crypto markets, the CFTC is acting within its current powers.
The action is consistent with the joint advice of the SEC and CFTC, which took place in September, that clarified that registered exchanges could conduct spot trading in some commodities, such as cryptocurrencies.
The work of Pham as the head of the CFTC might produce a long-term effect on the future of U.S. crypto regulation.
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