SEC, CFTC Propose Making U.S. Financial Markets 24/7 to Keep Up with Crypto

SEC Chair Paul Atkins and CFTC Acting Chair Caroline Pham have proposed significant pro-crypto regulatory reforms, including a '24/7 Markets' policy to enable continuous trading on traditional securities exchanges, adapting to the always-on digital asset market. Other proposals aim to liberalize perpetual derivatives and event contracts, and introduce 'innovation exemptions' for DeFi protocols, aligning U.S. markets with a global, evolving economy. While intended to bridge converging markets and loosen crypto restrictions, critics suggest these complex reforms could take years to implement and potentially give crypto-native firms a substantial edge over traditional finance.

Analysis

The leadership of the SEC and CFTC have jointly proposed a series of significant, pro-crypto regulatory reforms that could fundamentally reshape U.S. financial market structure. The centerpiece proposal is a "24/7 Markets" policy, which would eliminate the traditional weekday trading schedule for securities exchanges to align with the continuous nature of digital asset, gold, and foreign exchange markets. Further proposals aim to liberalize the trading of perpetual derivatives contracts, currently restricted in the U.S. but common offshore, and ease the listing of event contracts on prediction markets. The regulators also suggest creating "innovation exemptions" for DeFi protocols, a move explicitly designed to foster growth in the sector. These considerations are framed as an effort to adapt to the convergence of securities and non-securities markets and align with a Trump administration directive to loosen crypto restrictions. However, the proposals face significant criticism, with policy director Amanda Fischer of Better Markets labeling them "extremely dangerous" and warning they could take years to implement due to their complexity. A key risk highlighted is that these reforms could provide crypto-native firms with a distinct competitive advantage over traditional finance (TradFi) institutions across all markets.

Key Decisions for Investors

• Monitor market infrastructure providers and exchanges, as the proposed shift to 24/7 trading presents a long-term structural catalyst that will necessitate significant technological investment and could reshape competitive dynamics.
• Evaluate the potential for a competitive shift favoring crypto-native firms over traditional financial institutions, as the proposed DeFi exemptions and derivatives rules could create significant regulatory arbitrage.
• Investors should identify U.S.-based digital asset platforms and exchanges that are positioned to capitalize on the potential onshore introduction of perpetual derivatives, a highly liquid market segment currently dominated by offshore entities.
• Given the multi-year implementation timeline and inherent complexity noted by critics, treat these proposals as long-term directional indicators rather than immediate trading signals, focusing on building a watchlist of firms in fintech and digital asset services.