- SEC and CFTC propose 24/7 crypto derivative trading to modernize U.S. financial markets.
- Expanding to round-the-clock trading aligns U.S. markets with global financial systems.
- U.S. aims to lead in digital finance, outpacing Europe with enhanced crypto regulations.
The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) proposed a shift to 24/7 trading for crypto derivatives in a joint statement released on Friday. This change aims to modernize U.S. markets, potentially giving them an edge over slower European regulations. The move could set the U.S. at the forefront of the global next-gen economy.
Currently, U.S. markets operate under fixed hours, established in 1985. SEC Chair Paul Atkins and CFTC Acting Chair Caroline Pham emphasized the need for change. Global markets like crypto and foreign exchange never close, creating pressure for U.S. markets to adapt.
Expanding 24/7 Trading to Boost U.S. Competitiveness in Digital Assets
Expanding to 24/7 trading would help the U.S. remain competitive in the growing digital asset space. On-chain finance requires a continuous trading environment to scale effectively. The SEC and CFTC argue that an “always-on” market is crucial for keeping up with global financial systems.
Although a 24/7 market would add velocity to capital, it would add volatility as well. During off-hours, traders might be exposed to risks, especially because market movements are time zone sensitive. The SEC and CFTC recognize such a risk, but propose it to be limited to some asset classes.
The regulators also aim to provide clearer rules for new financial products, including event contracts and perpetual futures. These products, which have no expiry dates, are still evolving. The SEC and CFTC plan to craft regulatory guidelines to help these products function in a 24/7 market environment.
This proposal is part of a larger effort by the Trump administration to update U.S. financial regulations. A crypto report released in July recommended stronger cooperation between the SEC and CFTC. The report also outlined the CFTC’s authority to regulate spot crypto markets, while the SEC would oversee tokenized securities.
FBOT Framework and 24/7 Trading to Strengthen U.S. Market Leadership
The CFTC’s Foreign Board of Trade (FBOT) framework further supports this regulatory push. The FBOT framework allows offshore crypto exchanges to serve U.S. clients and has been in place for decades. This framework strengthens the U.S.’s position in the global digital asset market and further supports the move to 24/7 trading.
Related: SEC, CFTC Unite to Allow Spot Crypto Trading on U.S. Platforms
U.S. investors would benefit from more flexibility due to the 24/7 market. The trading would be continuous, allowing traders to react to events happening in the world. This could attract more international investors, which would boost U.S. markets.
Market fluctuations that occur during the night may be detrimental to the traders. The SEC and CFTC intend to counter these risks through the application of effective regulatory supervision. Their goal is to harmonize the availability of markets and stability requirements.
The U.S. has an opportunity to lead the global crypto space as Europe struggles with regulation. By adopting 24/7 markets, the U.S. could become a hub for digital finance, strengthening its position in the worldwide economy.
