Regulators need to prepare markets for what has been termed "mass tokenization" by adapting them to emerging technologies such as blockchain and artificial intelligence. This was emphasized by CFTC Chair Michael Selig during a conference at the Federal Reserve Bank of New York.
Selig highlighted Real-World Assets (RWA) as a significant focus area, suggesting that these assets could facilitate near-instantaneous settlements and real-time collateral transfers among clearing organizations, intermediaries, and market participants.
“With the evolution of tokenization, on-chain finance, and 24/7 trading, the next decade is likely to bring more changes to financial markets than several previous ones combined,” Selig remarked.
Additionally, the CFTC Chair expressed his opposition to a uniform approach for round-the-clock trading. He noted that while crypto assets and precious metals might be suitable for such a trading model, agricultural commodities, energy products, and certain financial instruments would require further assessment.
In May, the Commission issued guidelines for trading venues, clearing organizations, and intermediaries looking to transition to 24/7 trading, clearing, and settlement. In June, the agency sought market feedback on 24/7 trading of standard futures and perpetual contracts for physically delivered or stored energy products.
The May guidelines specifically pointed out that the digital infrastructure and the global nature of the crypto market facilitate the shift of crypto derivatives to continuous trading.
Selig also expressed a commitment to exploring additional ways for market participants, exchanges, and clearing organizations to responsibly utilize stablecoins.
In September, the CFTC’s market participant division expanded its leniency for providers of "passive" trading software. Under certain conditions, the agency will refrain from recommending sanctions for activities conducted without the registration of a presenting broker.
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