Attorneys warn current rules are built for legacy finance, not digital assets
The Foreign Board of Trade (FBOT) registry, recently highlighted in Commodity Futures Trading Commission (CFTC) guidance, is unlikely to encourage offshore crypto exchanges to return to the United States. Legal experts argue that the framework, designed for traditional financial markets, is ill-suited to the structure and operations of digital asset platforms.
FBOT’s Legacy Constraints
Under the FBOT framework, exchanges must meet strict requirements around settlement, clearing, and regulatory oversight. These obligations, crafted for conventional futures and derivatives markets, present major obstacles for crypto exchanges.
According to BITX financial attorneys, “The framework was never designed for digital assets. Most offshore exchanges simply cannot meet requirements that assume traditional clearing houses and settlement structures.”
The CFTC clarified that only licensed Futures Commission Merchants (FCMs) and similarly regulated institutions may apply under the FBOT system. This effectively excludes the majority of offshore exchanges that deliberately incorporate in jurisdictions with lighter oversight, such as Seychelles, to avoid stringent regulation.
Calls for Clearer Legislation
Instead of relying on FBOT guidance, attorneys emphasize the need for a dedicated crypto market structure bill in Congress. Such legislation would codify rules into law and provide stability that doesn’t shift with political administrations.
“Passing comprehensive legislation is the only path to creating lasting clarity for crypto exchanges,” one legal analyst argued.
The Broader CFTC Push
The FBOT debate comes amid the CFTC’s wider “crypto sprint,” part of a broader U.S. initiative to modernize financial rules and position the country as a leader in digital assets. Proposals under consideration include joint SEC-CFTC oversight and even the possibility of 24/7 trading across asset classes, a radical departure from legacy markets that pause for weekends and holidays.
While the FBOT registry underscores regulators’ attempts to extend existing frameworks to crypto, the model remains a poor fit for offshore exchanges. Until Congress establishes a dedicated crypto rulebook, U.S. access to international trading platforms is likely to remain fragmented and limited.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.