The U.S. Congress has been attempting to provide the Commodity Futures Trading Commission (CFTC) with more direct authority over crypto spot markets. Despite this, the agency is moving forward independently, with interim chief Caroline Pham actively engaging regulated exchanges to potentially launch spot crypto products in the upcoming month, according to insiders.
Amid the federal government shutdown, which is impeding crypto policy efforts in Washington, Acting Chairman Pham has been meeting with various financial platforms interested in listing spot crypto contracts. The CFTC is also considering further guidance on this trading, building on Pham’s assertion that the agency possesses the legal authority to engage with these markets.
Pham, who is slated to be succeeded by President Trump’s nominee, SEC crypto official Mike Selig, is focused on restructuring the CFTC and its enforcement division. She is also working towards a tokenized collateral policy anticipated to be released early next year. The most pressing policy area the agency is advancing is the oversight of new retail spot products on regulated platforms, operating without a congressional mandate.
“While we collaborate with Congress to clarify legislative matters in these markets, we are also utilizing existing authorities to rapidly implement the recommendations from the President’s Working Group on Digital Asset Markets report,” Pham stated. “I’m enthusiastic about new products expected to commence trading in our markets by year’s end and am ensuring a smooth transition for President Trump’s nominee for the permanent CFTC chairman.”
Spot trading in commodities—direct transactions involving actual assets, including digital currencies like bitcoin and Ethereum—has been a significant regulatory concern in the industry’s lobbying efforts in Washington. Many lawmakers, alongside Pham’s Democratic predecessor, have insisted that Congress must grant the CFTC oversight of these markets. If Pham facilitates CFTC-regulated exchanges towards leveraged trading of bitcoin and ether, she could bypass some of those legal challenges, encouraging institutional investors to explore crypto.
“Accessing these crypto products on regulated platforms that offer familiar protections may encourage institutions and other sophisticated market participants to increase their exposure to crypto,” said Kris Swiatek, a lawyer advising asset managers on digital assets.
Leveraged Spot Crypto
The crypto commodity trades involving margin and leverage would occur on designated contract markets (DCMs) under comprehensive commodities laws, offering investors and their advisors additional assurance. While this limited trading window exists, there remains significant scope for future U.S. market structure legislation to further outline the crypto spot landscape.
Although a CFTC spokesman declined to specify which exchanges might lead this initiative, sources suggest that those already engaged in crypto are likely to expedite their offerings. Some crypto-native firms, including Coinbase and Bitnomial, possess DCM status, along with prediction market platforms like Kalshi and Polymarket.
“The CFTC’s recent work on spot market regulation is notably encouraging,” said Cody Carbone, CEO of the Digital Chamber advocating for supportive crypto policies in Washington. “Because market structure largely hinges on Congress reopening the government, agencies responding to the president’s executive order and task force recommendations need to take action.”
The better-known U.S. Securities and Exchange Commission (SEC) has garnered much attention within the crypto realm due to its previous resistance toward the industry’s practices. However, the CFTC holds jurisdiction over the majority of digital asset token transactions. Even SEC chairman Paul Atkins, appointed by President Trump, suggests that most assets in the sector are not securities and fall outside of his agency’s control, thereby placing a substantial portion of crypto regulation with the CFTC.
Recently, the leaders of the SEC and CFTC indicated they are collaboratively addressing new product offerings, guiding the exchanges under their purview that certain crypto commodity spot trading is permissible if conducted correctly and in consultation with regulators. Pham, exempt from current constraints on federal worker activities, has actively engaged with private-sector firms.
Andreessen Horowitz (a16z), a major investor in crypto initiatives, recently communicated to the CFTC that its public guidance represents a vital opportunity to reverse offshoring trends by providing American retail investors access to leveraged spot crypto products within a robust regulatory framework that upholds market integrity and investor protection.
Stablecoin Collateral
The CFTC’s other immediate policy change would allow stablecoins as acceptable tokenized collateral in the expansive derivatives market, likely commencing as a pilot program at U.S. clearinghouses by the second quarter of next year. This will feature stricter oversight, including additional disclosures on position sizes, large traders, and trading volume, plus increased reporting on operational incidents.
Pham, who has advocated for the notion of tokenized collateral, has termed this development a “killer app” for stablecoins.
Since taking office at the start of the year, Pham has been among federal officials monitoring massive reductions in government workforce under Elon Musk’s Department of Government Efficiency. She made significant personnel decisions, cancelled costly service contracts, and initiated policy projects—her “crypto sprint”—without hesitation despite her interim position. These efforts aimed to expedite digital asset regulations and meet Trump’s demands. Pham’s ongoing restructuring of the agency has involved revamping the enforcement division, which has focused largely on crypto cases recently.
While the internal transformation of the agency has faced pushback, resulting in many long-term employees exiting under the Trump administration’s buyout offers, the reduced staff creates opportunities for remodeling key functions at the CFTC. Pham intends to establish a dedicated enforcement unit of 8 to 9 trial lawyers, potentially recruiting ex-prosecutors from the Department of Justice for enhanced courtroom expertise.
The agency is actively considering bolstering its budget by hiring legal professionals from more affordable locations, such as Kansas City.
Pham has communicated her departure plans with the administration and has agreed to remain until a new chairman is confirmed. Her tenure has been extended as the president’s first choice, former Commissioner Brian Quintenz, was withdrawn due to a public altercation with Gemini CEO Tyler Winklevoss amidst ongoing Senate negotiations over the government shutdown, which may further delay confirmation.
Sources indicate that Pham intends to join MoonPay, a U.S.-based crypto infrastructure provider, as chief legal officer and administrative officer upon leaving the agency. This would align her with other former CFTC commissioners transitioning into the digital space. Other notable examples include former Republican commissioner Summer Mersinger, who now leads the Blockchain Association; Quintenz, who has moved to a16z Crypto; and former Chairman J. Christopher Giancarlo, who serves on the Digital Chamber’s board.
The timeline for the Senate to vote on Selig’s confirmation remains unclear. Pham could be in place to implement additional changes at the agency.
Despite some difficulties in hiring earlier this year, she is pressing on to recruit individuals with deep financial sector experience to assume leadership roles at the CFTC.
Solo Commissioner
Currently, she is the only member of what is meant to be a five-person commission, placing her in a unique situation akin to directors of agencies like the Consumer Financial Protection Bureau. However, crypto lobbyists and legal experts have expressed concerns regarding the legal validity of policy decisions made by a single Republican chairman as the Trump administration aims to minimize input from opposition parties within federal agencies.
The CFTC’s only formal crypto rulemaking in progress involves adjusting agency regulations to accommodate blockchain technology, affecting several rules across its jurisdiction.
“In the early months of this administration, we prioritized returning to foundational practices at the CFTC, optimizing operations, and preparing for expanded oversight in the digital asset area,” said Pham, a sentiment welcomed by crypto firms.
“We’ve been very satisfied with her commitment to critical initiatives,” stated Faryar Shirzad, Coinbase’s chief policy officer. He described Pham as being open to input from companies like Coinbase in the agency’s operations.
Pham has been in contact with Selig during his confirmation preparations. If confirmed, he is generally expected to maintain a crypto-friendly stance, given his integral role in the SEC’s Project Crypto, which collaborates with the CFTC.
The industry’s anticipation has long hinged on the notion of significant investments awaiting a well-regulated environment. Increased government backing has accelerated this process over the past year, and experts suggest the CFTC’s move into spot trading could provide an additional boost of confidence.
“There’s been considerable interest in this area from traditional firms,” noted Swiatek. “It gives them a chance to compete for business from those seeking digital asset exposure without abandoning traditional finance frameworks.”
He foresees “a lot of potential movement” as entities compete for a share of this expanding ecosystem.
