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- SEC and CFTC open a 60-day review of crypto derivatives regulation after futures approvals.
- Regulators seek portfolio margin feedback to improve risk controls and market efficiency.
- CFTC legal disputes with Kentucky and CME add pressure to crypto derivatives oversight.
The Securities and Exchange Commission and Commodity Futures Trading Commission opened a joint review of crypto derivatives regulation after U.S. approval of regulated crypto perpetual futures. The agencies also started a 60-day public comment period. It begins after Federal Register publication.
The SEC and CFTC asked for public feedback on portfolio margining rules. The review covers securities, security-based swaps, futures, swaps, and related positions. The agencies want to assess whether those rules can be better aligned.
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SEC and CFTC Put Crypto Derivatives Regulation Under Review
The review puts crypto derivatives regulation under fresh U.S. scrutiny. It comes as crypto futures and tokenized financial products expand in regulated markets. Regulators said coordination may improve risk controls and reduce market fragmentation.
Portfolio margining lets firms offset risks across related positions. Separate rules can keep capital locked in different accounts. The agencies are now asking whether cross-margining could make markets more efficient.
The consultation follows recent approval of U.S. crypto perpetual futures. Kalshi received CFTC approval to list perpetual futures tied to Bitcoin, Ether, XRP, and HYPE. Hyperliquid has also expanded access to perpetual products linked to tokenized securities.
SEC Chair Paul Atkins supported closer cooperation between the two agencies. He said overlapping duties can slow innovation and reduce market efficiency. His comments placed cross-margining at the center of crypto derivatives regulation.
Atkins said cross-margining could unlock liquidity held in separate accounts. He encouraged market participants to submit ideas for better coordination. The request gives trading firms, exchanges, and investors a formal channel to respond.
CFTC Supports Cross-Margining Push in Wider Derivatives Review
CFTC Chair Michael Selig also backed the review. He said closer portfolio margining coordination could release unused capital. He also said it could support stronger risk management and market protections.
The latest consultation is part of a wider derivatives review. Earlier this week, both agencies asked for comments on swaps and security-based swaps. That request focused on Title VII of the Dodd-Frank Act.
The agencies said market practices have changed since those rules were adopted. They are asking whether current definitions still fit today’s derivatives markets. That review could affect crypto derivatives regulation and other complex financial products.
The earlier request also covers swap exclusions and mixed swaps. It asks about jurisdictional issues, alternative compliance, and new product structures. The agencies said responses may guide future staff interpretations and court proceedings.
CFTC Faces Court Tests Over Prediction and Futures Markets
The review comes as the CFTC faces legal disputes. The agency sued Kentucky after the state targeted prediction market operators. Those operators include Kalshi and Polymarket.
The CFTC said federally regulated futures, options, and swaps fall under federal law. It pointed to the Commodity Exchange Act as the main authority. Kentucky argues sports-linked event contracts should face state gambling rules.
CME Group is also challenging the CFTC over crypto perpetual futures approval. That case adds another legal test for crypto derivatives regulation. It shows how courts and agencies are now shaping the same market.
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