CFTC May Approve Foreign Crypto Exchanges Under U.S. Rules — What It Means for Traders

The Commodity Futures Trading Commission (CFTC) is weighing approval for foreign crypto exchanges to operate under U.S. regulatory frameworks, Acting Chairman Caroline D. Pham said on September 8

Speaking before the UK Parliament’s All-Party Parliamentary Group on Blockchain Technologies, Pham outlined a cross-border framework that could widen market access for American traders and bring offshore activity back under U.S. oversight.

This came barely a week ago when the CFTC issued an advisory allowing foreign boards of trade to offer U.S. traders direct market access.

The approach would build on the CFTC’s long-standing framework for foreign boards of trade, known as FBOTs, which has been in place since the 1990s. Under this system, overseas exchanges can serve U.S. customers if their home jurisdictions meet comparable regulatory standards.

Extending recognition to qualified foreign platforms would mark a major expansion of the CFTC’s cross-border reach.

Pham argued the approach could help stem the outflow of U.S. crypto trading activity to offshore exchanges and instead bring those markets under a regulatory umbrella that aligns with American rules. She described the framework as the most practical way to repatriate trading volume without waiting for lengthy legislative changes or new bilateral agreements.

CFTC Eyes Global Crypto Alignment as Pham Urges U.S. to Welcome Back Firms

In her speech, Acting Chairman Caroline D. Pham noted that many American crypto firms moved operations abroad in recent years, citing a lack of clear rules in the United States. Jurisdictions in Europe, Asia, and the Middle East developed digital asset frameworks that drew companies away. She noted that the U.S. can no longer delay welcoming platforms that want to invest, hire, and build in the U.S

Her call comes on the heels of the President’s Working Group on Digital Asset Markets report, which sets out a vision for what officials have described as a “Golden Age of Crypto.”

The report urges Washington to modernize bank oversight, strengthen the dollar’s role in global finance, enforce robust taxation, and combat illicit use, all while giving the SEC and CFTC a mandate to use existing powers to authorize digital asset trading under clear federal standards.

That would mean rules around custody, registration, trading, and recordkeeping would be streamlined for firms seeking entry into the U.S. market.

Pham further noted that the CFTC will consider whether platforms authorized under the European Union’s Markets in Financial Instruments Directive (MiFID) or the Markets in Crypto-Assets Regulation (MiCA) qualify for access. Other jurisdictions with equivalent regimes could also be recognized.

Major exchanges such as Kraken, KuCoin, Coinbase, OKX, Crypto.com, and Gemini have already pursued MiFID and MiCA approvals, expanding their reach across Europe under these regimes.

According to Pham, these frameworks already include requirements on capital, risk management, custody, and retail protections. Aligning them with U.S. rules would help avoid market fragmentation and improve global coordination.

CFTC and SEC Push “Crypto Sprint” as Global Crackdown on Offshore Exchanges Intensifies

The CFTC and Securities and Exchange Commission (SEC) are accelerating efforts to bring clarity to U.S. digital asset markets through a joint “Crypto Sprint” initiative.

The SEC has launched “Project Crypto,” while the CFTC has opened consultations on trading rules, with both agencies working toward harmonizing product definitions, reporting obligations, and capital requirements.

The push reflects a growing shift to integrate crypto markets under existing U.S. securities and futures laws. Just last week, the SEC and CFTC jointly affirmed that registered exchanges are permitted to list and trade certain spot digital assets, effectively folding them into long-standing investor protections and compliance standards.

A joint SEC-CFTC roundtable will take place Sept. 29 to discuss regulatory alignment, including the role of decentralized finance. Last week, U.S. senators revised the Responsible Financial Innovation Act of 2025 to clarify SEC and CFTC roles and add protections for DeFi and emerging blockchain sectors.

Meanwhile, the agencies recently issued a joint staff statement clarifying that existing U.S. law allows registered exchanges to facilitate certain spot crypto trades.

Additionally, the CFTC has opened a public consultation on listed spot crypto trading and other proposals from the President’s Working Group on Digital Asset Markets.

The U.S. policy sprint arrives as regulators worldwide step up scrutiny of offshore exchanges. Bybit resumed its trading app in India after paying a 9.27 crore rupee ($1.06 million) fine for violating anti-money laundering rules.

Meanwhile, South Korea’s Financial Intelligence Unit (FIU) is investigating unregistered overseas crypto exchanges, including BitMEX, KuCoin, CoinW, Bitunix, and KCEX, for targeting local users without VASP registration.

In 2023, Taiwan’s Financial Supervisory Commission (FSC) planned to restrict offshore crypto exchanges unless they register locally, aiming to improve disclosure, set listing standards, and ensure proper custody of client assets.

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