Former SEC, CFTC officials urge lighter touch for crypto trading

Two of the most prominent alumni of America’s financial regulatory apparatus are making the same pitch: if the US wants a piece of the world’s largest derivatives market, it needs to stop regulating like it’s 1934.

Former CFTC Chairman J. Christopher Giancarlo and ex-SEC Chair Tim Massad have both called for principles-based regulation of digital assets, arguing that the current patchwork of rules and legislative inaction is effectively gift-wrapping market share for offshore venues. The perpetual futures market alone, valued at roughly $90 trillion in annual notional volume, operates almost entirely outside US jurisdiction.

The CLARITY Act: passed, then parked

The Digital Asset Market Clarity Act, better known as the CLARITY Act, was supposed to fix this. The legislation aims to draw a clean jurisdictional line between the SEC and the CFTC, clarifying which tokens count as securities and which are commodities. The House passed it on July 17, 2025, with a 294-134 bipartisan vote.

The Senate Banking Committee advanced its own version 15-9 in May 2026. Ethics disputes and competing legislative priorities have kept the bill in recess limbo, leaving the crypto industry in the same jurisdictional fog it has occupied for years.

Regulators press ahead anyway

On September 2, 2025, the SEC and CFTC issued a joint statement confirming that registered exchanges can legally offer certain leveraged or margined spot crypto asset transactions.

The CFTC has been especially active. The agency approved perpetual futures contracts on regulated platforms like Kalshi, which generated more than $1 billion in trade volume shortly after launching its crypto perpetuals product in mid-2026.

Other CFTC initiatives over the past year include reviews of tokenized collateral and further development of perpetual derivatives markets on regulated exchanges.

Massad and former SEC Chair Jay Clayton have jointly urged both agencies to develop coordinated standards focused on major tokens like Bitcoin and ETH, without attempting to rewrite existing legal definitions.

The offshore problem, in numbers

Perpetual futures, the instrument that lets traders take leveraged long or short positions without an expiration date, have become the most traded product in all of crypto. The roughly $90 trillion annual notional volume dwarfs the spot market by an order of magnitude.

Nearly all of that activity happens on exchanges domiciled outside the US. Platforms like Binance, Bybit, and OKX have historically captured the lion’s share, serving global users from jurisdictions where regulatory requirements are lighter or, in some cases, effectively nonexistent.

The $1 billion-plus in volume on Kalshi suggests there is genuine domestic demand for regulated perpetual products. But onshore venues remain at a structural disadvantage when they compete against offshore platforms that offer higher leverage, more token pairs, and fewer compliance hurdles.

What to watch

The CLARITY Act’s Senate trajectory is the single most important variable for the US crypto market over the next year. If the bill passes, it would provide the first comprehensive statutory framework for digital assets. If it stays stuck, the current pattern of incremental agency action will continue.

The Trump administration has signaled a general openness to crypto innovation, which gives the regulatory agencies some political cover to push boundaries. Agency guidance can be reversed by the next administration. Statutes are stickier.

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