Regulatory Veterans Call for Measured Approach to Crypto Perpetuals
Former SEC and CFTC officials are urging regulators to adopt a balanced approach to crypto derivatives rulemaking, warning that overly burdensome rules are keeping a $90 trillion offshore market from coming onshore.
Bipartisan Push for Calibrated Crypto Rules
A coalition of former securities and commodities regulators has stepped into the ongoing debate over how to structure oversight of crypto derivatives, urging the SEC and CFTC to adopt proportional regulatory treatment. The group—which includes former CFTC Chair Chris Giancarlo, ex-CFTC Commissioners Brian Quintenz and Sharon Brown-Hruska, as well as former SEC Commissioner Steven Wallman and ex-SEC Chief Economist Chester Spatt—filed a comment letter emphasizing that financial risks of equivalent magnitude should receive equivalent regulatory responses.
Their core argument centers on regulatory calibration. When rules become misaligned or duplicative across agencies, compliance costs mount without commensurate safety improvements. More troublingly, according to the former officials, such regulatory friction has pushed substantial trading volume offshore, where U.S. oversight cannot reach it.
The Offshore Migration and Path Back
The economic stakes are substantial. Kalshi, a prediction market platform that entered the crypto perpetuals space earlier this year, has calculated that offshore perpetuals trading reached roughly $90 trillion during 2025, nearly triple the $28 trillion figure from approximately two years prior. This explosion of offshore activity reflects the reality that U.S. regulatory constraints have, to date, mostly prevented domestic platforms from competing in this market segment.
Recent developments suggest momentum is building to reverse that trend. In late August, President Trump stated that CFTC Chair Michael Selig is actively pursuing the domestication of Hyperliquid, one of the most widely used offshore perpetuals platforms. Simultaneously, the CFTC itself is working to establish clearer definitional and jurisdictional frameworks that would permit perpetual futures to trade legally within U.S. borders.
Regulatory Initiatives Advance in Parallel
While broader market-structure legislation remains stalled in congressional recess, the SEC and CFTC have not waited. The two agencies jointly requested public input in June on how various derivatives should be classified and where each agency’s regulatory authority should apply. They also asked for guidance on treating novel and emerging products.
The SEC has separately undertaken a comprehensive revision of its cryptocurrency custody framework, recently submitting an updated version to the White House for interagency coordination. The objective is to establish clearer standards for how regulated investment advisers can hold and manage digital assets for clients.
The intervention by these respected former officials carries particular weight given their bipartisan composition. By framing the issue as one of market competitiveness and investor protection—rather than partisan positioning—the signatories demonstrated that pragmatic crypto regulation enjoys cross-party support among those with deep regulatory expertise. The officials noted that longstanding common ground exists between commissioners of both parties on the fundamentals of investor safety and market integrity.
The comment letter was prepared with assistance from law firm Bellementis PLLC and was sponsored by Kalshi. The signatories clarified, however, that they received no compensation for their participation and that Kalshi exercised no control over the letter’s contents.
Bringing $90 trillion in crypto perpetuals trading onshore could reshape capital flows and strengthen domestic blockchain infrastructure as a competitive global hub.
Source: SEC and CFTC, via Decrypt. Not financial advice.