USA Trends and Developments Contributed by: Andrea S Kramer, ASKramer Law
The US derivatives markets are poised for more changes than they have ever experienced in their rela - tively short history. Although there are many reasons for these changes, the primary one is the explosion of the crypto markets. By the end of 2024, the global derivatives markets had expanded above USD700 trillion notional, of which the United States’ share was about 27%. Crypto deriva - tives are not centrally regulated and reported, so cur - rent estimates range widely from USD20 trillion to USD28 trillion at 2024 year-end (possibly higher), with crypto derivatives dwarfing the crypto spot market in volume. Only time will tell whether the integration of crypto derivatives into the traditional derivatives mar - ket is what the US markets need to support innova - tion, expansion and broad change. A common idiom in the United States describes this situation: the tail wags the dog, instead of the dog wagging its tail. In 2025, the crypto “tail” wags the traditional derivatives “dog”. That is, the smaller cryp - to market is driving change in the larger, traditional market. US President Donald Trump, who was inaugurated on 20 January 2025, has made a commitment to cryp - to in his second term. He had appointed his Crypto Czar even before he was sworn into office, and invited crypto executives to his inauguration. Two days later, he issued Executive Order 14178, promising “to make America the Bitcoin superpower of the world and the crypto capital of the planet”. Additional pro-crypto Executive Orders followed, including one establish - ing a strategic Bitcoin reserve and a US digital asset stockpile, and another opening the door for digital assets to be included in employer-sponsored retire - ment plans. He also: • formed the President’s Working Group on Digital Assets (PWG), which presented its findings and recommendations to the President in July; • appointed senior officials who support crypto; • hosted a White House crypto summit; • signed pro-crypto legislation; and • gave derivatives regulators authority to meet his promises and roll back innovation-impeding regula - tions.
In April, he signed a law to rescind an Internal Revenue Service (IRS) rule on broker reporting that would have disadvantaged decentralised finance (DeFi) platforms and liquidity providers. In July, he signed the GENIUS Act to support US dollar-backed stablecoins. Two more legislative initiatives – the CLARITY Act and the Anti-Central Bank Digital Currency Surveillance State (CBDC) Act – are moving through Congress, promis - ing to significantly influence future derivatives market regulations. The Executive Branch, Department of Justice (DOJ), Securities and Exchange Commission (SEC), Com - modity Futures Trading Commission (CFTC) and Treasury Department have all developed ambitious 2025 derivatives agendas. They are collaborating to better anticipate and respond to market develop - ments, seek public comments on “regulations that stifle American businesses and American ingenuity”, and provide regulatory clarity for new and emerging products. Unlike his predecessors, President Trump seems unencumbered by the existing regulatory structures of the derivative markets. He consistently leans towards deregulation. A businessman first and foremost, he did not come from a trading or regulatory background, and he seems to view market regulation flexibly. If the first half of 2025 is any indication, we will see regula - tory regimes increasingly unconstrained and adjust - ing quickly to accommodate innovation, support DeFi, and transition towards emerging business models, products and technologies. Regulatory Structure and Process Calls to modernise the US derivatives markets are not new. However, because of the complex and fragment - ed ways in which derivatives regulations have evolved, barriers to reform remain stubbornly entrenched. Per - haps America is ready to look at “regulatory sand - boxes”, where regulatory and market innovations are encouraged and have proven effective abroad in accelerating “fit-for-purpose” regulatory develop - ments. For decades, there have been calls for better and more expeditious oversight of the US derivatives markets. Maybe, in 2025, we will see innovation driv - ing regulatory changes that reshape not just crypto
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