Offshore Crypto Exchange’s Won’t Use FBOT Framework To Do Business in US


The recent Commodity Futures Trading Commission (CFTC) advisory on offshore exchanges serving US residents under the Foreign Board of Trade (FBOT) framework won’t bring offshore crypto exchanges back to the US, according to Eli Cohen, general counsel at real-world asset (RWA) tokenization company Centrifuge.

Cohen told Cointelegraph that settlement, clearing, and other regulatory requirements designed for the traditional financial system, required to serve US clients under the FBOT framework, are not tailored for crypto exchanges and will be difficult or impossible to fulfill. 

The CFTC’s guidance also stipulated that only Licensed Futures Commission (FCM) exchanges, which are broker-dealers for futures contracts, and other highly regulated entities, are qualified to apply under the FBOT framework, Cohen said. He added:

“The main problem is that only regulated exchanges outside the United States can apply for the FBOT. So, you need to have an existing regulatory framework in your home country.” 

CFTC, US Government, United States, Cryptocurrency Exchange
CFTC staff guidance outlining qualifying criteria to register under the FBOT framework and serve US residents. Source: CFTC

Many exchanges choose to set up businesses in Seychelles or other unregulated jurisdictions to avoid such a framework in the first place, Cohen added.

The best way to provide clarity for crypto exchanges is to pass a crypto market structure bill in Congress, codifying crypto regulations into law, and creating lasting change that does not shift from administration to administration, Cohen said.

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The CFTC’s “crypto sprint” is an initiative to overhaul crypto regulations to fulfill US president Donald Trump’s agenda of making the US the global leader in crypto.

Several policy recommendations were proposed in the Trump administration’s crypto report, which was published in July, including giving the Securities and Exchange Commission (SEC) and the CFTC joint oversight over crypto.