Lighter CEO says DeFi can strengthen regulatory transparency
Lighter founder and CEO Vladimir Novakovski told the CFTC Innovation Advisory Committee that decentralized finance should not be viewed as an adversary to regulators, arguing that verifiable on-chain transactions can make oversight easier.
Novakovski said blockchain infrastructure can improve transparency, consumer protection and market fairness because transactions and system behavior can be independently verified.
He also argued that decentralized, verifiable financial infrastructure could improve cybersecurity and operational resilience, particularly as more financial activity moves on-chain.
The remarks closed the committee’s first session on the evolution of the U.S. crypto regulatory framework before a scheduled break.
Chainlink’s Sergey Nazarov says tokenized equities will drive next on-chain wave
Chainlink co-founder Sergey Nazarov said the next major phase of blockchain adoption will come from the tokenization of equities, bringing a large share of traditional financial value on-chain.
Nazarov warned that the U.S. needs to move its financial system on-chain at least as quickly as other markets if it wants to preserve its dominant position in global equities.
He also pointed to 24/7 collateral management, greater transparency and smart-contract security as key advantages of blockchain-based market infrastructure, particularly as AI increases cyber risks across financial markets.
ISDA CEO urges CFTC to update custody and margin rules for tokenized markets
ISDA CEO Scott O’Malia urged the CFTC to modernize rules covering crypto custody, margin, cross-margining and tokenized collateral, saying the regulatory framework needs to evolve alongside market infrastructure.
O’Malia specifically pointed to CFTC rules covering wallets and eligible depositories, arguing that margin haircuts should reflect the risk of the underlying asset rather than whether it is delivered through tokenization.
He also stressed the importance of cross-product margining and legal certainty around netting, warning that faster tokenized settlement should not eliminate capital efficiencies already provided by netting.
As markets move toward 24/7 trading, O’Malia said regulators will also need coordinated rules for collateral movement, clearing, default management and risk controls across both traditional and new market infrastructure.
Carla Reyes urges CFTC to protect DeFi developers even if CLARITY passes
Professor Carla Reyes urged the CFTC to move ahead with clear rules for developers of decentralized financial protocols, saying protections should remain part of the agency’s roadmap regardless of whether the CLARITY Act advances.
Reyes pointed to the CFTC’s previous enforcement actions involving Opyn, Deridex and 0x, arguing that the settlements left developers uncertain about when protocol development could trigger CFTC regulation.
She said developer protections included in current CLARITY proposals are important but too narrow to resolve those earlier issues.
Reyes also urged the agency to adopt a functional approach rather than rigid crypto taxonomies, separating the underlying technology from the financial activity it performs when determining how a product should be regulated.
Polymarket founder says crypto innovation must have a legal path in U.S.
Polymarket founder and CEO Shayne Coplan told the CFTC Innovation Advisory Committee that U.S. regulation does not need to make launching new financial products easy, but it must make them possible to build legally in America.
Coplan said Polymarket first approached the CFTC in 2021 with a proposal for how decentralized finance could operate legally in the U.S. He later acquired a DCM and DCO as the company sought a regulated path for its business.
“It can be very tedious, it can be a very difficult process, but there has to be a way to do it in America,” Coplan said.
He also urged regulators to distinguish between the underlying technology and the financial product itself, arguing that a financial instrument may be permissible even when it is delivered through a new technological structure.
Nasdaq CEO says Bitcoin index options stuck in regulatory limbo
Nasdaq Chair and CEO Adena Friedman urged the SEC and CFTC to resolve cross-agency jurisdiction issues that have delayed the exchange’s planned Bitcoin index options product for about a year and a half.
Friedman said Nasdaq has already listed crypto ETFs and options on those ETFs through its SEC-regulated markets, but a Bitcoin index options product requires coordination between the SEC and CFTC.
“We’ve been in regulatory limbo now for a year and a half,” Friedman said, calling for the agencies to turn their recent collaboration into tangible progress on products that cross regulatory boundaries.
The identification is also consistent with the committee roster, which lists Adena Friedman — Nasdaq — Chair & CEO.
DTCC CEO says SEC-CFTC coordination is helping markets move faster
DTCC CEO Frank LaSalla told the CFTC Innovation Advisory Committee that closer coordination between regulators is already helping traditional financial firms move ahead with projects tied to blockchain, tokenization and market modernization.
LaSalla said financial markets are changing rapidly as blockchain, crypto and AI reshape infrastructure, making direct engagement between regulators and market participants increasingly important. Even when formal rules are still developing, he said access to agency staff can give firms enough confidence to continue investing and building.
He pointed to previous regulatory discussions involving the SEC’s crypto task force, saying the open dialogue gave DTCC “an open lane” to discuss emerging products despite broader uncertainty around regulation.
LaSalla also highlighted recent SEC-CFTC harmonization efforts, saying they allowed DTCC to advance cross-margining between cash and futures markets.
“That allowed us to be able to do cross-margining with cash and futures,” LaSalla said, adding that DTCC was able to deliver value to the market once the regulatory position became clearer.
He urged the CFTC to continue convening smaller groups of regulators, infrastructure providers and market participants while Congress works through broader legislation, arguing that regular dialogue can prevent uncertainty from slowing the adoption of new market technology.
Consensys CEO says DeFi will blur SEC-CFTC regulatory lines
Consensys founder and CEO Joseph Lubin told the CFTC Innovation Advisory Committee that decentralized finance will increasingly challenge traditional regulatory categories because the same on-chain product can carry characteristics of a security, commodity or derivative.
Lubin said regulators may need a first-principles approach to emerging DeFi structures, particularly vaults, which can combine multiple financial instruments inside programmable smart contracts.
He argued that smart contracts also differ from traditional financial products because they can make strategies transparent through code while allowing users to retain custody of their assets.
Lubin said closer coordination between the CFTC and SEC will be necessary as these new financial structures become harder to fit into existing regulatory definitions.
Blockchain.com CEO warns MiCA-style rules could hurt startups
Blockchain.com CEO Peter Smith warned the CFTC against creating crypto rules that become too costly for smaller companies, pointing to Europe’s MiCA framework as a cautionary example.
Smith said thousands of digital asset firms have struggled to meet MiCA requirements, forcing some to wind down as the framework came fully into force.
He urged U.S. regulators to consider regulatory sandboxes and safe harbors tied to business size, allowing startups to develop products without immediately facing the same compliance burden as large firms.
Smith added that regulation also needs to move faster as AI and LLM tools accelerate the pace at which companies build new products.
Wilson calls for rules on 24/7 tokenized collateral
Wilson also urged the CFTC to clarify how collateral should move as crypto and financial markets shift toward 24/7 trading.
He said regulators should address weekend margin cycles and clarify whether futures commission merchants can self-custody customer segregated funds in tokenized form.
“These are real concerns… that need to be clarified not six months from now, but kind of now,” Wilson said.
Cumberland founder urges CFTC to bring crypto perpetual futures onshore
Don Wilson, founder of DRW and crypto trading firm Cumberland, urged the CFTC to regulate perpetual futures as futures rather than swaps, warning that classifying them as swaps could keep the market offshore.
Wilson said perpetual futures can be useful risk-management products without adopting features common on offshore exchanges, such as 100x leverage or auto-deleveraging.
“If we categorize them as swaps, they’re just going to remain offshore,” Wilson said, calling for regulated perpetual futures across a wider range of products.
Ripple CEO says SEC battle cost company $150 million
Ripple CEO Brad Garlinghouse said the company spent $150 million on outside legal counsel during its four-year battle with the SEC, arguing that most crypto companies could not have survived similar costs.
Garlinghouse said regulatory uncertainty also pushed Ripple’s expansion abroad, with 80% of its hiring during those four years taking place outside the U.S. London remains Ripple’s second-largest office.
“The status quo is not good enough for consumers or for innovation,” Garlinghouse said, calling for clear rules that protect users while giving crypto companies certainty to build in the U.S.
Uniswap founder says U.S. enforcement pushed crypto startups offshore
Uniswap founder Hayden Adams told the CFTC committee that years of regulatory uncertainty and enforcement actions made it difficult for crypto startups to remain and build in the United States.
Adams said Uniswap faced debanking, an SEC Wells notice after a four-year investigation, a CFTC investigation and additional scrutiny from state regulators while operating as roughly a 100-person startup.
He said several founders he knew either shut their companies or left the U.S., while overseas competitors were able to move faster.
Adams urged Congress to pass crypto market structure legislation, adding that if legislation fails, regulators should provide proactive rules and guidance to give builders longer-term certainty.
“We need clarity, and if we don’t get clarity, we need proactive regulations,” Adams said.
Mike Belshe calls for faster crypto regulation
Crypto executive Mike Belshe told the CFTC Innovation Advisory Committee that regulatory delays are becoming a major obstacle for fast-moving financial businesses.
He criticized regulation by enforcement, saying firms need faster decisions and clearer guidance instead of facing penalties after launching products.
“We are perfectly happy to work with the regulators,” Belshe said. “We just don’t want the regulation by enforcement.”
Belshe also backed the CFTC’s principles-based regulatory model, arguing that rigid rules can quickly become outdated as technology and markets evolve.
CFTC plans new reporting and consumer rules for prediction markets
The CFTC is also preparing broader changes to how fully collateralized event contracts and prediction markets are regulated, Chairman Michael Selig said.
Selig said the agency has proposed modernizing reporting requirements for fully collateralized event contracts, with the goal of giving regulators sufficient market information while reducing unnecessary regulatory complexity.
He also said the Commission is expected to soon propose amendments to Parts 38 and 40 of CFTC regulations governing designated contract markets that list event contracts.
Those changes are expected to address consumer protection, product governance, market design and incentive programs.
Selig acknowledged concerns over protections for retail participants, saying the CFTC had heard public criticism that its existing consumer safeguards were inadequate.
Closing his remarks, Selig also addressed crypto industry executives in the room, saying they had endured an earlier period of aggressive regulatory scrutiny but continued building in the United States. He said the committee’s broader objective is to ensure emerging financial markets and technologies are developed domestically rather than pushed offshore.
CFTC moves to define when event contracts can be prohibited
Selig said the CFTC has proposed changes to Rule 40.11 aimed at establishing clearer standards for when the agency can prohibit event contracts on public-interest grounds.
Federal law gives the CFTC discretion over contracts involving areas including war, terrorism, assassination, gaming and illegal activity, but Selig said the statute does not clearly define terms such as “gaming” or provide criteria for determining the public interest.
He argued that the lack of definitions has left designated contract markets exposed to decisions based on changing political or regulatory interpretations.
Selig criticized the previous administration’s attempt to restrict event contracts tied to politics, sports and cultural events, saying the agency had invoked the public interest without first defining how that standard should be applied.
The proposed Rule 40.11 amendments would define key terms and establish specific public-interest criteria for the Commission to consider when reviewing contracts.
CFTC will no longer try to push prediction markets offshore
CFTC is abandoning an approach that sought to restrict emerging financial products until the activity moved outside the United States, drawing a parallel between event contracts and the earlier treatment of crypto assets.
Chairman Mike Selig, said regulators had previously tried to outlaw products including commodity options, crypto assets and event contracts rather than establish workable rules for them.
“We’re not going to take that approach anymore at the CFTC,” Selig said.
He pointed to jurisdictions such as the Bahamas as examples of where financial innovation can migrate when U.S. rules become prohibitive, arguing that the CFTC instead intends to build a domestic regulatory framework around emerging markets.
Selig then turned to event contracts and prediction markets, outlining several regulatory changes now being developed by the agency.
CFTC exploring new crypto market regime if Congress fails to act
CFTC Chairman Michael Selig said he has directed agency staff to begin exploring rules that could establish a CFTC-regulated market structure for crypto assets using the commission’s existing authority.
The potential framework could allow both existing CFTC registrants and currently unregistered crypto exchanges to seek designation under a new category described by Selig as a “crypto asset market.”
Those platforms could then offer crypto trading involving leverage or margin under rules specifically designed for digital asset markets and under CFTC oversight.
Selig also said he has directed CFTC staff to engage directly with developers of on-chain finance protocols to determine how those protocols could legally and compliantly operate in the United States.
The agency will initially give Congress additional time to vote on the CLARITY Act. But Selig said that if lawmakers fail to advance the bipartisan legislation, he will direct staff to “move swiftly” toward proposing the CFTC’s own crypto rules.
“We’re going to give CLARITY its breathing room for a vote,” Selig said, before adding that the agency is prepared to act if Congress does not.
Passing CLARITY Act is most important step for crypto
CFTC Chairman Michael Selig urged Congress to pass bipartisan crypto market structure legislation, calling passage of the CLARITY Act the most important step toward establishing durable rules for the U.S. digital asset industry.
“The most important step towards future-proofing this industry is passing this bipartisan bill,” Selig said.
He argued that legislation is necessary to prevent a future administration from reversing the current regulatory direction and returning to an enforcement-led approach toward crypto companies.
Selig called on industry executives attending the meeting to continue engaging with Capitol Hill to push the legislation “across the finish line.”
However, he also made clear that the CFTC is preparing an alternative if Congress fails to act.
“If CLARITY continues to stall,” Selig said, the CFTC will use its existing authorities to begin building a regulatory regime for crypto asset markets.
CFTC and SEC are working on crypto asset taxonomy
CFTC Chairman Michael Selig said the agency is working with SEC Chairman Paul Atkins on “Project Crypto” to establish clearer rules for determining which crypto assets are securities and which are not.
Selig said the initiative is intended to give markets greater certainty after what he described as years of regulation by enforcement, where businesses could not know in advance whether their activities complied with U.S. law.
“I partnered with Chairman Atkins at the Securities and Exchange Commission on Project Crypto to codify a clear taxonomy for crypto assets,” Selig said.
He said the framework would draw a clearer jurisdictional line between the two agencies as Washington works toward a broader federal market structure for digital assets.
Selig also criticized the previous regulatory approach, telling crypto industry participants in the room that many had been “victims” of enforcement policies that operated without clear rules on the books.
Walt Lukken says CFTC must stop separating ‘traditional’ and new markets
Innovation Advisory Committee Chair Walt Lukken said in the meeting that regulators should no longer treat traditional derivatives, crypto and prediction markets as fundamentally separate categories.
“We must stop distinguishing between traditional and new market types,” Lukken said, adding that firms across the industry are competing and innovating regardless of the type of market they operate.
Lukken pointed to the rapid expansion of CFTC-regulated markets. He said the agency oversaw 16 designated contract markets in 2003, compared with 30 today and another 17 applications pending. The number of traded contracts regulated by the CFTC has also risen from around 2,100 in 2023 to 6,700 today, which he described as roughly a threefold increase.
He attributed part of that growth to the flexibility built into the Commodity Exchange Act, including principles-based regulation, self-certification and the CFTC’s exemptive authority. Lukken said Congress had tasked the agency with promoting responsible innovation and fair competition without sacrificing market safety or customer protection.
Lukken also stressed that the committee is not designed to advocate for a particular technology or business model. Instead, it will provide the CFTC with practical recommendations based on the experience of companies building and operating financial markets.
“Good policy is informed policy,” he said, arguing that regulators need input from the people directly using and developing these markets.
CFTC Chairman Michael S. Selig is scheduled to follow Lukken with his opening remarks before the meeting moves into its first crypto-focused session. The CFTC lists Selig as the committee’s sponsor and Lukken as one of its members.
CFTC committee roster shows broad crypto and market-structure reach
The CFTC’s Innovation Advisory Committee is drawing from a wide cross-section of crypto, trading and traditional market infrastructure, underscoring how broadly today’s policy discussion could extend beyond spot digital assets alone.
The committee roster includes executives from crypto-native firms such as Consensys, Anchorage Digital, Grayscale, Chainlink Labs, OKX, Kraken, Blockchain.com, Gemini, Solana Labs, FalconX, Multicoin Capital and Paradigm. It also includes representatives from traditional finance and market infrastructure groups including Franklin Templeton, DTCC, LSEG, Intercontinental Exchange, ISDA and DRW.
The list also features firms tied to prediction markets and consumer trading platforms, including Kalshi, DraftKings and Robinhood, signaling that the committee’s scope may reach into adjacent questions around market access, event contracts, trading infrastructure and regulated product design.
CFTC Innovation Advisory Committee meeting to begin
The U.S. Commodity Futures Trading Commission is set to begin the inaugural meeting of its Innovation Advisory Committee on August 20, 2026, with crypto market structure, regulatory clarity, and the future of digital asset oversight at the center of the agenda.
According to the official agenda, the meeting will run from 1:00 p.m. to 4:00 p.m. ET at Three Lafayette Centre in Washington, D.C. Opening remarks are scheduled from 1:00 p.m. to 1:30 p.m. ET, led by Michael J. Passalacqua, designated federal officer for the Innovation Advisory Committee, Walt Lukken, chair of the committee, and CFTC Chairman Michael S. Selig, who is listed as the committee’s sponsor.
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