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As the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission speed up work to overhaul rules on crypto derivatives and custody, former officials raised concerns.
On Aug. 31, blockchain outlet Decrypt reported that the two agencies are proceeding first with steps to revise derivative definitions, jurisdictional boundaries and digital asset custody rules while a congressional Clarity bill remains pending.
A key issue is how to classify new derivatives such as swaps, security-based swaps and perpetual futures, and which agency should oversee them. In June, the SEC and CFTC began seeking public input on definitions for such products and on where each agency’s jurisdiction begins and ends.
Former senior SEC and CFTC officials argued in a joint comment letter that regulation should be applied in line with risk levels and that overlapping regulation should not only raise compliance costs. The letter was signed by Chris Giancarlo (크리스 지안카를로), Brian Quintenz (브라이언 퀸텐즈), Sharon Brown-Hruska (샤론 브라운-흐루스카), Steven Wallman (스티븐 월먼) and Chester Spatt (체스터 스패트). They stressed that investor protection and maintaining the competitiveness of U.S. markets are not partisan issues.
The discussion also intersects with a push by the CFTC to bring crypto perpetual futures trading into the U.S. market. U.S. President Donald Trump also said earlier this month that CFTC Commissioner Michael Selig is working to bring offshore perpetual futures platform Hyperliquid into the United States. Prediction market platform Kalshi launched a crypto perpetual futures product earlier this year and estimated that offshore perpetual futures trading volume in 2025 exceeded 90 trillion dollars. That is a sharp increase from about 28 trillion dollars two years earlier.
The SEC has separately begun revising its crypto custody rules. Last week, the SEC asked the Office of Information and Regulatory Affairs under the White House to review a proposed revision to custody rules that would apply to investment advisers and investment companies. The key is to clarify how investment companies overseen by the SEC can provide digital asset custody services while complying with federal securities laws. Investment advisers in particular must use qualified custodians that meet client asset protection and accounting standards, making it a focus for the industry which operators can obtain crypto custody qualifications.
This overhaul differs in direction from rules former SEC Chair Gary Gensler pursued three years ago. That proposal would have effectively expanded existing adviser custody requirements to nearly all client assets, including cryptocurrencies. The SEC under the Atkins leadership scrapped that proposal last year.
The SEC’s ‘Reg Crypto’ proposal has also been officially published in the Federal Register, opening a comment period through Oct. 20. The proposal includes plans to set new standards for issuing some crypto assets. As U.S. regulators revise derivatives jurisdiction, custody and issuance rules at the same time, discussions on bringing the crypto market into the U.S. regulatory framework are expected to accelerate.
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