USA Law and Practice Contributed by: Margo H. K. Tank, Michael Fluhr, Deborah Meshulam, Kristin Boggiano, David Stier, Liz S. M. Caires, Adam Dubin, Emily Honsa Hicks, Meghan Carey, Kathleen Birrane and Eric Hall, DLA Piper LLP
ty or a derivative on a security, federal securities laws would apply, requiring additional licensing. Cryptocurrencies and tokens not considered to be securities may be considered commodities subject to CFTC regulation. Exchanges con - ducting only spot transactions do not have to register, but those trading derivatives on spot transactions must register with the CFTC and comply with CFTC regulations. Decentralised exchanges would similarly be required to register based upon whether the asset on the platform is a security, a derivative on a security, a commodity or a derivative on a commodity. However, decentralised exchanges operate in a regulatory grey area because they lack central intermediaries. See 2.10 Significant Enforcement Actions and 10. Blockchain . 6.4 Listing Standards There is currently no uniform US regulatory listing standard for digital assets offered on centralised or decentralised platforms. The platforms com - monly have their own listing frameworks. Listing requirements for digital assets may include: • whether the asset is a security or commodity; • the extent of community adoption; • trading volume; and • indicia of code reliability or vulnerability. Certain decentralised exchanges may provide guidance on how to list a token, but many remain effectively permissionless. CFTC regulates the listing of digital asset deriv - ative products. Under CFTC guidance, trading platforms and clearing houses should:
• partner and have information sharing agree - ments with spot market platforms that follow KYC/AML rules; • monitor price settlement data from spot markets and identify/investigate anomalies or disproportionate moves; • set large trader reporting thresholds at five Bitcoins or less; • regularly coordinate with CFTC staff and pro - vide trade data; and • allow CFTC staff to review initial and mainte - nance margins for cryptocurrency futures. The CEA provides a self-certification process for new digital asset commodities products to be listed on designated contract markets (DCMs) or through swap execution facilities (SEFs). In early 2024, the first CFTC-regulated exchange offered margin Bitcoin Cash and Litecoin futures contracts. In 2024, the SEC approved 21 ETPs that held Bitcoin and/or Ethereum. The relevant exchange (ie, NYSE, Nasdaq, or CBOE) must obtain SEC approval before listing such products, and the ETP issuer must file a SEC registration state - ment. Once approved and listed on a national exchange, ETPs must comply with the listing requirements of those exchanges. 6.5 Order Handling Rules For both retail and non-retail commodities transactions, CFTC order handling rules require futures commission merchants (FCMs), SEFs and DCMs to maintain fair and orderly markets – there is a prohibition on front-running. Order handling rules do not apply to spot exchanges trading digital assets. See 10.8 Cryptocurrency Derivatives .
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