CFTC Issues Advisory to Clarify FBOT Registration Framework for Non-U.S. Crypto Exchanges to Access U.S.-based Participants
To promote regulatory clarity, on August 28, 2025, the Commodity Futures Trading Commission ("CFTC")'s Division of Market Oversight issued an advisory to reaffirm its longstanding foreign board of trade ("FBOT") registration framework for non-U.S. exchanges, including non-U.S. crypto exchanges, that seek to offer trading access to U.S.-based participants.
The FBOT registration framework, which has been in place since the 1990s, allows non-U.S. exchanges legally organized and operating outside the United States to offer trading access to U.S.-based participants, provided they register as FBOTs with the CFTC. The advisory reaffirms that the FBOT registration framework applies to all asset classes, including digital assets, and aims to facilitate lawful onshore trading activity under CFTC oversight.
The CFTC's advisory seeks to eliminate ambiguity regarding the registration requirements for non-U.S. exchanges. Recent years had seen increased confusion over whether non-U.S. exchanges should register as designated contract markets ("DCMs") or FBOTs. The advisory clarifies that the longstanding FBOT registration framework remains the appropriate and efficient pathway for non-U.S. exchanges to serve U.S. customers, countering ambiguity from novel legal interpretations advanced in recent enforcement actions. An FBOT must meet certain criteria and qualifications that are potentially more streamlined than those of a DCM.
Through its advisory, the CFTC also aims to welcome back onshore American exchanges that opted for foreign jurisdictions due to previous enforcement actions. Such actions, in Acting Chairman Caroline D. Pham's view, often applied stringent out-of-context rules, ignored precedent, or created vague new standards. The current advisory echoes previous remarks by Acting Chairman Pham in the UK House of Lords, in which she noted: "Our current CFTC regulated entities could begin trading crypto on day one, and bring previously offshore activity back onshore to the U.S. with no negative impact to depth of market liquidity."
Both the Securities and Exchange Commission ("SEC") and the CFTC have promptly responded to the White House's call to action in its Digital Asset Report, as described in our Alert, "New White House Report Outlines U.S. Policy for Digital Assets." The SEC launched "Project Crypto," while the CFTC has begun policy changes such as the one discussed above under its "Crypto Sprint."
