As global trading trends run toward 24-hour markets with no days off, the US Commodity Futures Trading Commission argued that may be fine for the new blockchain-native players, but extended hours may not be appropriate for some of the traditional markets, the derivatives watchdog said in a Friday letter issued to the broad waterfront of companies it regulates.
The advisory — coming on the same day the agency gave the go-ahead to native crypto platforms offering perpetual futures contracts — marks what could be a widening rift between the traditional firms and the new players.
“Due to inherent differences between underlying markets, switching to 24/7 trading and clearing may not be suitable for all asset classes,” the agency wrote to its regulated exchanges and clearing operations.
“The ability to engage in and maintain markets on a 24/7 basis has been paralleled in part by developments in market technologies, such as blockchain networks and decentralized infrastructure, alternative forms of collateral, including stablecoins and cryptoassets, and market access through smartphones and related software applications,” the CFTC noted. “With these developments, an increasing number of platforms, with a growing list of tradable products, provide 24/7 access to retail and institutional participants.”
suitable for 24/7 trading due to their unique customer bases, regional character and the specialized nature
trading and hedging practices in these markets.”
Derivatives Watch’s primary concern is the potential for market abuse in less observed off-peak activity, arguing that “extending trading hours to a 24/7 schedule for certain markets or products could potentially result in reduced liquidity, increased volatility, widened bid/ask spreads and, as a result, create greater opportunities for market manipulation.”
The platforms are responsible for monitoring themselves as the first line of defense and “should implement additional compliance measures designed to address the unique challenges associated with extended hours.”
The purpose of the advisory was to outline the considerations for companies looking to expand business hours, and the CFTC encouraged them to communicate their plans to the agency.
The current head of the agency, Chairman Mike Selig, has made it one of his top priorities to embrace new technologies, including crypto and prediction markets. His enthusiasm for the progress — tracking orders and encouragement from President Donald Trump — has led to a surge in crypto policy work aimed at clearing a regulatory path for the industry.
One of the crypto-native firms overseen by the CFTC, Coinbase, said in a blog post on its website on Friday that it is trying to rebuild traditional financial services on top of crypto infrastructure.
“Stock, futures and prediction markets all operate 24/7 on our platform,” the company said, noting the agency’s new authorization of global options and perps through one of its CFTC-regulated subsidiaries. “Today’s announcement adds the largest and most liquid category of global crypto trading to this lineup.”
