U.S. Commodity Futures Trading Commission (CFTC) Chairman Michael Selig said that the agency is "modernizing" its rules "so that there’s a place" for decentralized finance in the United States.
Speaking during a panel discussion with Securities and Exchange Commssion (SEC) Chairman Paul Atkins at the Milken Institute today, March 3, Selig said that the agency is working on regulations around on-chain markets to “accommodate on-chain software systems.”
Selig noted that DeFi protocols have faced years of regulatory uncertainty in the U.S. — as well as regulation by enforecement — and that the CFTC wants to provide clarity as to when and how DeFi protocols fall under its jurisdiction:
“[…]The prior administration characterized many of these […] types of software systems as a type of exchange or broker. We’re gonna make sure it’s very clear as to what implicates the CFTC’s regulations and what doesn’t,” Selig stated, adding:
“And to the extent that an on-chain software system or frontend does implicate our rules and regulations we’re modernizing and future proofing those rules so that there’s a place for all of that.”
SEC chair Atkins echoed the sentiment, reiterating that the SEC is committed to working together with the CFTC on crypto regulations.
The CFTC Chairman said the two regulators are partnering to provide a “taxonomy” for crypto assets, namely by defining more clearly what’s a security and what’s not under U.S. law.
“Part of that starts with our existing derivatives markets,” Selig argued, continuing, “Many of the firms want to move on-chain. The prior administration drove a lot of these firms, and the liquidity, offshore.”
‘True’ Perps Are Coming to the US
The CFTC Chairman also commented on perpetual futures markets, saying that regulatory uncertainty under previous administrations had prevented these markets from being offered on U.S. regulated platforms.
Selig said, however, that regulated perps are coming to the U.S. “within the next month or so”:
“We need to have that liquidity here in the U.S. and we need the right investor protections to ensure that these firms don’t blow up and affect our shores. So we’re working toward getting [...] true perpetual futures [...] here in the U.S. within the next month or so.”
Prediction Markets Need Clarity
During the panel discussion, the two Chairs were also asked about prediction markets, which exploded into mainstream popularity over the past year.
Chairman Selig said that the CFTC and SEC have a lot of shared authority in regard to prediction markets, stating that clarity for platforms like Kalshi and Polymarket is also coming soon.
“We're going to be setting very clear standards as to what can be self-certified in our markets and what cannot and how to evaluate the different products that are offered in the space," Selig said, adding:
"We are also planning to go forward with an advanced notice of proposed rulemaking in the near future that will set the stage for more fulsome rulemaking."
The comments come just a week after the CFTC announced it was filing a "friend-of-the-court" brief in Nevada in support of Crypto.com, arguing more broadly that prediction markets should fall under the federal agency’s supervision, not that of separate state regulators.
“We’re really excited to continue to modernize and upgrade our rules for the 21st century,” Selig concluded.
This regulatory shift in the U.S. was also marked last summer by the SEC’s unveiling of its broader initiative, "Project Crypto," which aims to “modernize” securities regulations in the U.S. in an effort to bring capital markets on-chain.
Meanwhile, the crypto industry is still waiting for U.S. lawmakers to pass a broader crypto market structure bill, as discussion continue in the Senate.