Stringent FBOT Rules Could Keep Crypto Exchanges Out of US

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Why are offshore crypto exchanges avoiding the US?

What are FBOT rules, and how do they impact crypto exchanges?

Could outdated US regulations harm innovation in the crypto market?

Stringent FBOT Rules Could Keep Crypto Exchanges Out of US — Image source: Unblock Media

CFTC issued new guidelines under the FBOT framework targeting offshore exchanges.
Experts believe stringent requirements under the framework do not align with cryptocurrency markets.

The CFTC’s FBOT advisory, reported on September 6, 2025, imposes hurdles likely to deter offshore crypto exchanges from targeting U.S. residents. The advisory outlined regulatory requirements for overseas platforms seeking approval to operate under the framework, which is traditionally applied to financial systems such as futures and derivatives markets.

Legal experts argue the FBOT framework is poorly suited for cryptocurrency exchanges because it imposes stringent conditions concerning settlement and clearing processes. These requirements were designed for traditional finance and fail to account for the operational realities of digital asset platforms. As a result, the framework is unlikely to attract offshore exchanges to enter the U.S. market.

Eli Cohen, general counsel at Centrifuge, highlighted that one of the most significant hurdles is the condition requiring exchanges to be regulated in their home jurisdictions prior to applying for FBOT registration. Many cryptocurrency exchanges deliberately establish themselves in countries with minimal regulation, making this requirement potentially prohibitive.

The general consensus among attorneys is that the U.S. needs a dedicated crypto market structure bill to streamline regulatory processes for digital asset platforms. Such legislation would provide clearer and more suitable guidance, reducing barriers for exchanges and addressing existing gaps under frameworks like FBOT.

The CFTC advisory is part of a broader "crypto sprint," an ongoing initiative to reform digital asset regulations and strengthen the United States' position as a global leader in cryptocurrency oversight. The initiative aligns with the administration's proposals to create joint oversight mechanisms between the CFTC and the Securities and Exchange Commission (SEC), including exploring reforms such as a 24/7 trading cycle for all asset classes.