The post CFTC approval to spark US-leveraged crypto trade transformation appeared on BitcoinEthereumNews.com.

On Dec. 4, the United States Commodity Futures Trading Commission (CFTC) approved leveraged spot crypto trading on federally regulated exchanges. For the first time in American history, spot Bitcoin and other crypto assets can trade with margin inside the CFTC framework that already governs futures and options, backed by central clearing and long-tested risk management. Acting Chairman Caroline Pham called it a “historic milestone” that finally gives Americans “safe US markets now, not offshore exchanges that lack basic safeguards against uncontrolled customer losses.” The move does not kill the offshore venues that dominated the last cycle. Instead, it sets up something more structural: a lasting split between two parallel Bitcoin markets serving different users and risk appetites. The great bifurcation begins For 15 years, US law has required leveraged retail commodity transactions to occur on regulated exchanges. In practice, that requirement never applied to crypto because no such exchanges existed for leveraged spot. As Pham put it, Congress passed reforms after the financial crisis, but “the CFTC never implemented this critical customer protection reform by providing regulatory clarity on how to list these retail exchange-traded products despite years of market demand.” The result was a long period of regulatory exile. The entire market for margin-based spot trading migrated offshore into jurisdictions such as the Seychelles, the Bahamas, and the British Virgin Islands. Platforms there offered high leverage and minimal oversight, becoming the engine of Bitcoin’s price discovery. However, when Sam Bankman-Fried’s FTX collapsed, that model’s vulnerabilities were exposed in full. Yesterday’s move ends that exile, but not by bringing everything home. Instead, it formalizes a divide. One market will remain offshore, high-leverage and high-risk, serving the so-called “degen” retail trader who wants minimal friction. The other will develop onshore, with lower leverage, central clearing, and portfolio margining for banks, hedge…

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Filed under: News - @ December 5, 2025 5:26 pm