The recent advisory from the Commodity Futures Trading Commission (CFTC) regarding offshore crypto exchanges for US residents has sparked debates among experts. Eli Cohen, general counsel at Centrifuge, shared his insights on its implications in the crypto industry.
Critique of CFTC Advisories
Eli Cohen stated that the regulatory requirements regarding settlements and clearing outlined in the new model are poorly suited for crypto exchanges. According to him, these requirements are nearly impossible to fulfill for crypto platforms, casting doubt on the success of this initiative. Cohen noted, 'The main problem is that only regulated exchanges outside the United States can apply for the FBOT. So, you need to have an existing regulatory framework in your home country.'
CFTC Initiatives for Crypto Regulation
The CFTC has launched the 'crypto sprint' initiative aimed at overhauling cryptocurrency regulations. This initiative seeks to fulfill the previous administration's policy of making the US a global leader in crypto. Recommendations include joint oversight by the SEC and CFTC over the crypto realm, which could significantly alter asset trading approaches.
Future of Crypto Exchanges in the US
Many crypto exchanges opt to set up in jurisdictions like Seychelles to avoid complex regulatory pressures. Cohen suggested that the best way to provide clarity for crypto exchanges is to pass a crypto market structure bill in Congress, creating clear rules and establishing a sustainable regulatory framework, independent from shifts in administration.
The regulation of cryptocurrency exchanges in the US remains a complex topic requiring a detailed approach. The adoption of clear laws could resolve many emerging issues; however, implementing CFTC's current recommendations presents significant challenges for the crypto industry.
