CFTC’s Pham Moves to Launch Spot Crypto Trading Without Congress

The U.S. Congress has long been trying to grant the Commodity Futures Trading Commission more direct authority over crypto spot markets, but the agency is forging ahead without it, and interim chief Caroline Pham is in talks with regulated exchanges to launch spot crypto products as soon as next month, according to people with direct knowledge of the plans.

Even during the federal government shutdown that’s otherwise delaying crypto policy efforts in Washington, the people said that Acting Chairman Pham has been meeting personally with multiple financial platforms interested in listing spot crypto contracts. The CFTC is also weighing some further guidance on the how-to of this trading, they said, building on Pham’s public position that the agency has ample legal authority to approach the markets this way.

Pham — who is eventually set to be replaced by President Donald Trump’s new nominee, SEC crypto official Mike Selig — is busy overhauling the CFTC’s internal structure and its enforcement division, and she’s also heading toward a tokenized collateral policy that is expected to emerge by early next year. But the most immediate policy area the agency is pressing forward on is in overseeing the new retail spot products on regulated platforms, done in the absence of a law from Congress.

“As we continue to work with Congress on bringing legislative clarity to these markets, we are also using existing authorities to swiftly implement recommendations in the President’s Working Group on Digital Asset Markets report,” Pham said in a statement to CoinDesk. “I’m excited about new products that we expect to begin trading in our markets before year’s end, and am working to ensure a smooth transition for President Trump’s nominee for the permanent CFTC chairman.”

Spot trading in commodities — the immediate trading of actual assets rather than futures, in this case including digital-assets transactions in such tokens as bitcoin BTC$103,126.41 and Ethereum’s ether ETH$3,472.23 — has been a major regulatory question at the center of the industry’s policy lobbying in Washington. Many lawmakers and Pham’s Democratic predecessor atop the agency have argued that Congress needs to grant the CFTC oversight powers there. If Pham ushers CFTC-regulated exchanges toward leveraged trading of such assets as bitcoin and ether, she’s potentially vaulted over some of that legal hurdle and could give institutional investors more incentive to look at crypto.

“By being able to access such crypto products on a regulated venue that is subject to familiar protections, these institutions and other sophisticated market participants may be more willing to gain or increase their crypto exposure because it’s available somewhere that has regulated protections that they’re used to,” said Kris Swiatek a lawyer at Seward & Kissel who advises asset managers on digital assets, in an interview.

Leveraged spot crypto

The crypto commodity trades — involving margin, leverage or financing — would take place on so-called designated contract markets (DCMs) under the full, traditional regulation of commodities laws, potentially giving investors and their advisers that further assurance. The limited window of trading still leaves plenty of territory for the eventual U.S. market structure legislation to further define the crypto spot world and its inner workings.

Though an agency spokesman declined to identify the exchanges that may take the lead, the people familiar with the talks say the DCMs that are already immersed in crypto are expected to be speediest to market. Some crypto-native companies such as Coinbase and Bitnomial hold DCM status, as do prediction-market platforms including Kalshi and Polymarket.

“Recent work by the CFTC on spot market regulation is particularly encouraging,” said Cody Carbone, CEO of the Digital Chamber that presses for friendly crypto policy in Washington. “Because market structure in many ways depends upon Congress reopening the government, agencies directed by the president’s executive order and task force recommendations have to step up.”

The better-known U.S. Securities and Exchange Commission has drawn the lion’s share of crypto attention in recent years, because of that regulator’s aggressive previous resistance to the industry’s business practices and legal stance, but its smaller CFTC cousin has probable jurisdiction over the vast bulk of digital assets token transactions. Even the pro-crypto SEC chairman appointed by President Donald Trump, Paul Atkins, suggests that the clear majority of assets in the sector are not securities and effectively beyond his agency’s reach. That leaves a big slice of crypto in the hands of the CFTC.

However, the SEC and CFTC leaders recently stepped forward to say they’re tackling the new product offerings jointly, instructing the exchanges they regulate that certain crypto commodity spot trading is fair game, if done properly and in consultation with regulators. Because Pham is exempt from current constraints on federal-worker activity, she has been able to take meetings and guide the private-sector firms directly, the people said.

Andreessen Horowitz (a16z), a leading investor in crypto projects, told the CFTC in a recent comment letter that the agency’s public guidance “represents a crucial opportunity to reverse this trend of offshoring by providing American retail investors with access to leveraged spot crypto products within a comprehensive regulatory framework that maintains the high standards of market integrity and investor protection that characterize U.S. derivatives markets.”

Stablecoin collateral

The regulator’s other short-term policy shift, which would permit the use of stablecoins among allowable tokenized collateral in the vast derivatives market, should get a final stamp by the second quarter of next year, according to the people familiar with the work. They said it’s likely to begin as a pilot program at U.S. clearinghouses — featuring more stringent oversight, with extra disclosures on such elements as position sizes, large traders and volume, plus more reporting on operational incidents.

Pham, who had long worked on the idea of tokenized collateral, has called this a “killer app” for stablecoins. 

When she took over at the start of the year, Pham was among federal-agency leaders who watched Elon Musk’s Department of Government Efficiency (DOGE) cut large swaths of workers from the government. She also made her own wide-ranging personnel decisions, cancelled certain expensive service contracts and started policy initiatives — such as her so-called “crypto sprint” — without apparent hesitation over her interim status. The crypto efforts sought to hurry digital assets policies along and meet Trump’s expressed demands. Pham’s ongoing restructuring of the inner workings of the agency have included revamping the enforcement division, which had been keenly focused on crypto cases in recent years.

Though the overhaul of the agency inside and out has ruffled some feathers, and droves of longtime employees have headed to the exits under the Trump administration’s buyout offers for federal workers, the depleted staffing leaves room to remake key functions at the CFTC. In enforcement, Pham’s aim is to stand up a dedicated unit of about eight or nine trial lawyers, potentially hiring ex-prosecutors from places such as the Department of Justice to bring more courtroom experience to the CFTC, the people said.

The agency has been particularly interested in stretching its budget by potentially hiring legal staff in less expensive parts of the country, such as Kansas City.

Pham had discussed her own departure plan with the administration in recent months and agreed to stay on until a chairman is confirmed to replace her. That tenure has been stretched after the president’s first choice of former Commissioner Brian Quintenz was withdrawn in the midst of a public dispute with Gemini CEO Tyler Winklevoss, and the Senate continues to struggle with negotiations over the government shutdown that may further delay its confirmation work.

Sources close to MoonPay, a U.S.-based crypto infrastructure service provider, said Pham has been planning to join the company as chief legal officer and chief administrative officer when she leaves the agency, which would see her follow in the footsteps of other former CFTC commissioners going into the digital space. A former Republican commissioner during Pham’s tenure, Summer Mersinger, recently left to helm the Blockchain Association as CEO; Quintenz has been running policy work at a16z Crypto; and former Chairman J. Christopher Giancarlo is on the Digital Chamber board and wrote a book styling himself as “CryptoDad.”

It’s unclear when the Senate will be able to vote on confirming Selig, an SEC official who Carbone said has “worked to shape sound digital asset policy in the public and private sector for years.” Pham may be around to implement a few more changes at the agency.

In the uncertainty over leadership, she struggled in some hiring talks early this year, but she’s pressing forward with trying to recruit people with decades of experience in the financial sector — generally at the level of running their corporate divisions — to take leadership roles at the CFTC, the people said.

Solo commissioner

As for the direct work of the commission, she’s in the highly unusual position of being a single member of what’s meant to be a five-commissioner agency. This effectively puts her in a role akin to agencies with a lone director, as in the Consumer Financial Protection Bureau or the Office of the Comptroller of the Currency. But crypto lobbyists and lawyers have quietly expressed uncertainty about the legal strength of policy decisions made by a solo Republican chairman, while the Trump administration deliberately seeks to empty federal agencies of opposition-party input called for under federal law.

The only formal crypto rulemaking currently in progress at the CFTC is an effort to amend agency rules to make room for the inclusion of blockchain technology — a technical effort spanning a number of rules across the agency’s jurisdiction.

“In the first few months of this administration, we’ve focused on getting back to basics at the CFTC, streamlining operations, and preparing for expanded oversight in the digital asset space,” Pham said, and that’s been welcomed by crypto firms.

“We’ve been very pleased with the degree to which she’s put critical work streams in motion,” said Faryar Shirzad, Coinbase’s chief policy officer, in an interview with CoinDesk. He said Pham has been “really open to companies like our own to be able to provide input into the agency’s work.”

She and Selig have been in contact during his preparations for the confirmation process, the people said. Selig — if confirmed by the Senate — is widely expected to continue in the same vein on crypto-friendly policy, because he’s been a leading staffer on the SEC’s own Project Crypto that’s worked in coordination with the CFTC.

The industry’s hopes have long been pinned on the concept of major investment dollars waiting on the sidelines until the field matures and gets safely regulated. A surge of government support in the past year has helped that along, but observers of the CFTC’s spot-trading initiative suggest it could give another big confidence boost.

“There’s been a lot of chatter about this, generally from traditional players,” Swiatek said.”It gives them an opportunity to compete for business from folks that want to get exposure to digital assets without having to necessarily leave the traditional finance framework.”

He predicted “a lot of potential movement there,” because he said, “everybody’s ultimately competing for a piece of this growing ecosystem.”