ANALYSIS: Evolving US crypto rules should support margin efficiencies - FIA
9th June, 2025|Radi Khasawneh
US regulators should be aware of the importance of cross-margining between crypto exchange-traded funds and futures as the policy-makers move ahead with their changes to the US crypto regulatory regime, the FIA has warned.
In commentary published on Friday, the global head of market intelligence at the Washington-based trade body said the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) should co-operate on rulemaking efforts to address the bifurcated regulatory approach that has emerged in recent years.
“Policymakers have a historic opportunity to address the artificial boundaries between products that fall under CFTC and SEC jurisdiction through cross-product margining and cross-product netting,” Will Acworth said in a post. “Addressing these barriers will help the US continue as a global leader in digital asset markets.”
Bitcoin exchange-traded funds (ETFs) are regulated by the SEC while bitcoin futures are under CFTC rules, which creates problems for firms looking to offset these related instruments.
“Many investors seek to hedge their risks by holding both types of products,” he added. “Unfortunately, neither the margin nor capital rules applicable in the US recognise the correlation and risk-offsetting nature of these products. This makes trading these products unnecessarily expensive for investors, disincentivises managing risk across portfolios and puts the US at a competitive disadvantage.
“Cross-product margining and netting offers an eloquent and time-tested solution.”
Both US regulators have launched consultations on the crypto markets this year. The SEC in March held the first of its “Spring Sprint Toward Crypto Clarity” roundtables, after creating earlier this year a crypto-asset task force under Commissioner Hester Peirce.
The CFTC has also launched a series of consultations aimed at aligning its oversight with practices in new markets such as 24/7 trading and perpetual futures. In response, various firms flagged concerns about the “self certification” process that allows firms to list new products such as perpetual contracts.
Speaking at a Piper Sandler event in New York on Thursday, Pham backed the process for retail focussed products such as perpetual derivatives.
“Since the beginning of this year, a number of designated contract markets (DCMs) have self-certified the listing of perpetual derivatives,” Pham (pictured) said in a keynote speech. “Again, under the CFTC’s self-certification process, no Commission approval is needed. CFTC staff appreciates the ongoing and active engagement with exchanges seeking to self-certify perpetual derivatives and their assistance in responding to questions and providing information.”
Bitnomial made available in April the first ever perpetual futures contracts listed on US exchange with a BTC/USD contract, according to FOW Data, after the crypto derivatives firm announced it had self-certified the product on the previous Thursday.
“A number of commenters were supportive of perpetual derivatives in the context of crypto asset markets,” she added. “They noted that perpetuals provide a continuous, lower cost spot-like exposure that does not need to roll-out of an expiring futures contract to retain a position.
“Commenters also noted potential advantages to bringing crypto asset perpetual derivatives to the US market and under the US regulatory umbrella.”
Pham is set to step down after confirmation of the appointment of Brian Quintenz as permanent CFTC chair. The move was confirmed at the International Swaps and Derivatives Association (ISDA) annual general meeting in Amsterdam last month, and was followed by the announcement of other departures late last month.
Christy Goldsmith Romero set her departure date as May 30, after first announcing her intention to leave in February, when former commissioner Quintenz was nominated as its permanent chair.
The news followed an announcement by Summer Mersinger that she would also leave on May 30 to head up the Blockchain Association. Kristin Johnson stated she would leave “later this year”, potentially creating four vacancies at the commission.
For Acworth, agencies need to co-operate further to ensure that efficiencies can be fully rolled out to support new markets.
“While the SEC and CFTC have addressed cross-product margining in limited circumstances before (most notably, for cleared swaps and cleared security-based-swaps), more work lies ahead,” he added. “The SEC and CFTC need to provide for cross product margining across SEC and CFTC registered products in a comprehensive way. This will more accurately reflect the risk of the portfolio and mitigate the higher costs market participants currently experience due to the overcollection of margin.”
