CFTC seeks to allow spot crypto trading on registered exchanges

Aug 5 (Reuters) - The U.S. Commodity Futures Trading Commission (CFTC) said on Monday it would launch an initiative to allow for trading of spot crypto asset contracts listed on a futures exchange registered with the agency.

While not final, the move is another by the Trump administration to integrate digital assets more deeply into traditional finance, and could pave the way for wider adoption of crypto assets.

The CFTC, which regulates U.S. derivatives markets, will enable immediate trading of digital assets at the federal level in coordination with the Securities and Exchange Commission's Project Crypto initiative, CFTC Acting Chair Caroline Pham said.

The CFTC invited stakeholders to comment on how to list the spot crypto asset contracts in a designated market.

This brings crypto one step closer to the structure and standards of traditional markets, said Saad Ahmed, head of Asia Pacific at Gemini, noting that it could drive broader use by institutions and sophisticated market participants globally.

The digital assets industry has made advances this year under U.S. President Donald Trump, with bills like the GENIUS Act and CLARITY Act designed to provide new, tailored rules it has long pushed for. The CFTC's latest move is another sign to crypto participants that regulators are intent on making infrastructure changes.

Shortly after taking office in January, Trump ordered the creation of a crypto working group tasked with proposing new regulations, making good on his campaign promise to overhaul U.S. crypto policy.

Last week, the Trump administration's working group released a landmark report in which the White House called on the U.S. securities regulator to create new rules specific to digital assets.

The report also encouraged the CFTC to use its existing authority to "immediately enable the trading of digital assets at the federal level."

Trump courted cash from the crypto sector on the campaign trail, calling himself the "crypto president." Industry executives spent hundreds of millions of dollars supporting Trump and other Republican congressional candidates in last year's elections.

SEC Chair Paul Atkins last week outlined several pro-crypto initiatives, including directing staff to develop guidelines to determine when a crypto token qualifies as a security, and proposals for various disclosures and exemptions.

The two regulators' approach marks a significant victory for the crypto industry, which has long advocated for tailored regulations.

It also may be seen as a win by exchanges. So far, crypto trading platforms have been major players in spot trading, taking advantage of the regulatory gray area.

"The hope continues to be that a broader range of assets beyond bitcoin and ethereum entrench themselves on U.S. venues over the next 24 months, and moves like this ultimately help along that process," said Joseph Edwards, head of research at Enigma Securities.

One key to the success of Trump's crypto initiatives will be the ability of the CFTC and SEC to resolve long-standing questions such as whether digital assets are commodities or securities, industry sources said.

Neither the CFTC nor the SEC immediately responded to requests seeking further comment.

Trump's embrace of digital assets is in stark contrast to former U.S. President Joe Biden's regulators, who cracked down on the industry to prevent fraud and money laundering.

The Biden administration sued exchanges Coinbase COIN.O, Binance and dozens more, alleging they were flouting U.S. laws. Trump's SEC has dropped those cases.