This week marked a significant shift in U.S. market structure as staff from the SEC and CFTC jointly clarified that registered national securities exchanges, designated contract markets, and foreign boards of trade are not prohibited from listing and trading certain spot crypto asset products. The statement, issued alongside operational expectations on custody, market surveillance, trade reporting, and fair dealing, effectively removes a longstanding legal barrier. We believe the guidance not only creates a clearer pathway for spot crypto markets on mainstream U.S. trading venues but also signals a broader policy intent to onshore digital asset activity under coordinated oversight. After years of jurisdictional disputes and piecemeal enforcement, this joint step suggests regulators are shifting toward active supervision of crypto markets, aligning the asset class more closely with the frameworks that govern equities, futures, and other commodities.
The prospect of registered venues offering spot crypto creates new access channels for brokerages and institutional order flow, particularly for firms that were hesitant to connect with offshore or unregulated platforms. More importantly, the joint posture demonstrates regulatory willingness to harmonize oversight of crypto rather than contest jurisdiction. If successful, this coordination could accelerate a broader migration of liquidity from offshore markets to U.S.-based venues. For investors, the outcome may be tighter spreads, better price discovery, and reduced counterparty risk as trading shifts into the perimeter of established supervisory regimes. For regulators, it presents an opportunity to bring transparency and oversight to an asset class that has grown too large to ignore.
We believe the first movers are likely to be crypto-native exchanges rather than the traditional incumbents. Coinbase and Kraken stand to benefit, particularly as Coinbase recently saw its unregistered-exchange lawsuit dropped by the SEC. This latest guidance provides a credible pathway for it to complete the transition into a fully regulated exchange. By contrast, national securities exchanges and contract markets will need time to evaluate technical requirements, counterparty risks, and compliance obligations before launching live spot markets. In the long run, however, the lines between traditional and crypto-native venues could blur. We expect to see traditional exchanges eventually add crypto while crypto exchanges move to offer equities or derivatives, creating a direct competitive overlap. That dynamic may favor investors, as greater venue diversity reduces concentration, expands choice, and enables better pricing.
We expect the first assets listed under this framework to be Bitcoin and Ether, with Solana likely following shortly after. These remain the most liquid and widely recognized crypto commodities, presenting the least ambiguity in classification. Over time, we anticipate that additional tokens may be added; however, the sequencing will depend on whether they are treated as commodities or securities. The SEC and CFTC will need to coordinate closely to define which path applies. This dynamic will shape the breadth of the market and the speed with which liquidity migrates. For now, clarity on the two most significant assets should be enough to catalyze initial adoption and test operational processes across custody, surveillance, and reporting.
Direct access to spot assets on regulated venues may reduce demand for wrappers like ETPs and digital asset treasuries. However, we do not expect those products to disappear; instead, they will likely evolve into vehicles that provide diversified exposure, much like mutual funds, rather than serving as the only on-ramp. Asset managers may still prefer to package exposure for portfolios that require simplified operations, tax treatment, or risk management. Meanwhile, custodians and prime brokers could see new demand as institutions allocate directly, with settlement and financing flows converging on regulated rails.
We note that this is staff guidance, not rulemaking, and therefore subject to reversal or litigation. Congress could also reshape the framework with a market structure bill, such as the proposed Clarity Act. That said, this is still a notable pivot as the SEC and CFTC are proactively setting guidance rather than relying solely on enforcement. Both agencies have also launched their own strategic initiatives. The SEC’s Project Crypto is exploring updates to the securities rulebook for digital assets, aiming to provide clarity on token classification and tools like airdrops and tokenized assets. The CFTC has completed consultations on perpetual derivatives and 24/7 trading, two crypto innovations that have already gone live on registered contract markets. In our view, this reflects an intentional shift toward engagement and modernization, even if the process is still in its early stages.
About Kiln
Kiln is the leading staking and digital asset rewards management platform, enabling institutional customers to earn rewards on their digital assets, or to whitelabel earning functionality into their products. Kiln runs validators on all major PoS blockchains, with over $11 billion in crypto assets being programmatically staked and running over 5% of the Ethereum network on a multi-client, multi-cloud, and multi-region infrastructure. Kiln also provides a validator-agnostic suite of products for fully automated deployment of validators and reporting and commission management, enabling custodians, wallets, and exchanges to streamline staking or DeFi operations across providers. Kiln is SOC2 Type 2 certified.
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