With Congress still in summer recess on crypto market structure legislation, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission are already moving ahead on rulemaking for the $2.5 trillion industry.
Both agencies are advancing several crypto-related initiatives. The list includes a new look at derivatives and a rewrite of the SEC’s crypto custody rules.
Former regulators weigh in on derivatives definitions
In June, the SEC and CFTC asked for public input on how swaps, security-based swaps, and novel or emerging products should be defined, along with where each agency’s jurisdiction should begin and end.
A bipartisan group of former SEC and CFTC officials has now responded with a warning: if those lines are drawn poorly, lucrative markets could keep moving overseas.
The new comment letter was signed by former CFTC Chairman Chris Giancarlo, former CFTC Commissioners Brian Quintenz and Sharon Brown-Hruska, former SEC Commissioner Steven Wallman, and former SEC Chief Economist Chester Spatt. They argue that similar risks should receive similar regulatory treatment, and that overlapping rules should not impose extra compliance costs.
The bipartisan lineup stands out because neither agency currently has bipartisan representation. The signatories said these questions are not inherently partisan, pointing to long-standing agreement across party lines on investor protection and the need to keep U.S. markets competitive.
Perpetual futures are central to the debate
The issue carries particular weight in crypto because the CFTC is looking to bring perpetual futures onshore. Some of the signatories have argued separately that U.S. regulation has largely pushed that market abroad.
Earlier this month, President Donald Trump said CFTC Chairman Michael Selig is working to bring the popular offshore perpetuals platform Hyperliquid into the United States.
Kalshi, a prediction market platform that began offering crypto perpetuals earlier this year, estimated that offshore perpetuals trading topped $90 trillion in 2025, up from around $28 trillion two years earlier. Kalshi sponsored the letter by retaining law firm Bellementis PLLC to help draft it, though the signatories said they were not compensated and that the company had no say over the contents.
The letter’s central argument is that regulation can push trading elsewhere, but it does not remove demand or eliminate risk. The group also says the window is narrowing.
Giancarlo told Crypto In America: “The $90 trillion offshore perpetuals market isn’t a mystery to solve, it’s a market waiting for a sensible U.S. rulebook. If we calibrate federal regulation to actual risk instead of maximum burden, that liquidity comes onshore. Every year we wait, it gets harder to bring to America.”
SEC custody rewrite heads to the White House
At the SEC, custody has returned to the front of the agenda. Last week, the agency sent a planned rewrite of its custody rules for investment advisers and investment companies to the White House Office of Information and Regulatory Affairs for review.
The planned rule is expected to address a question the crypto industry has pressed for years: how SEC-regulated investment firms can provide custodial services for digital assets while staying in compliance with federal securities laws.
That matters especially for investment advisers, which are required to use qualified custodians that meet strict standards for safeguarding and accounting for customer assets.
The text has not been released publicly, so it remains unclear which firms could qualify as crypto custodians or what requirements they would need to satisfy. What is clear is that the SEC says it wants to clarify the rules around crypto custody while removing provisions it sees as outdated.
This is a clear shift from the agency’s earlier approach. Three years ago, under then-Chairman Gary Gensler, the SEC proposed a broad safeguarding rule that would have expanded adviser custody requirements beyond funds and securities to nearly all client assets, including crypto.
The Atkins SEC scrapped that proposal last year.
Reg Crypto comment period runs through October 20
Separately, the SEC’s Reg Crypto proposal has formally reached the Federal Register and is open for public comment until October 20. The proposal would create new rules for certain crypto asset offerings.
The original report noted that the story appeared in Crypto in America, a newsletter written by Eleanor Terrett.