Former officials from the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission are calling on regulators to adopt a lighter regulatory approach if they want to lure the massive crypto perpetual futures market back to American shores, warning that heavy-handed rules will keep the trillions in trading activity offshore.
A Market Worth Chasing
Perpetual futures, commonly known as "perps," have grown into one of the largest segments of the crypto trading world. The instruments allow traders to bet on price movements without an expiry date, and the market has swelled to an estimated $90 trillion in annual volume. Yet the vast majority of that activity takes place on offshore platforms, well beyond the reach of U.S. oversight.
Former regulators argue that this represents both a missed opportunity and a risk. American traders continue to access these venues regardless of jurisdiction, meaning the activity persists without the investor protections that domestic regulation could provide.
Push too hard, and the trillions in perps trading simply stay overseas where U.S. rules can't touch them.
Regulators Move on Derivatives and Custody
With the Clarity Act, a key piece of crypto market-structure legislation, stalled during the congressional recess, the SEC and CFTC are not waiting on lawmakers. Both agencies are advancing their own efforts on crypto derivatives and custody, seeking to establish clearer frameworks in the absence of comprehensive legislation.
The concern voiced by former officials is one of balance. Rules that are too burdensome, they say, could defeat the entire purpose of bringing perps onshore by making compliance so costly or complex that platforms decline to operate in the United States at all.
Key considerations raised include:
- Crafting derivatives rules that accommodate the unique structure of perpetual contracts
- Establishing custody standards that protect investors without stifling innovation
- Avoiding regulatory overreach that pushes activity back offshore
The Path Forward
The debate underscores a broader tension in U.S. crypto policy: how to reconcile investor protection with the practical reality that overly strict requirements can drive markets elsewhere. Former regulators contend that a pragmatic, lighter-touch approach offers the best chance of drawing this activity into a supervised domestic environment.
As the agencies press ahead, the outcome could shape whether a significant slice of global crypto trading finally moves within U.S. borders