Former SEC and CFTC Officials Warn Burdensome Rules Keep $90 Trillion Perps Market Offshore

A coalition of former senior officials from the Securities and Exchange Commission and the Commodity Futures Trading Commission is pressing Washington to adopt a lighter regulatory touch on crypto derivatives, arguing that the current framework is ceding an estimated $90 trillion perpetual futures market to offshore venues beyond US oversight.

The officials, speaking publicly this week, framed the issue in direct competitive terms. Perpetual futures, or perps, are derivative contracts with no expiry date that allow traders to hold leveraged positions indefinitely. They dominate global crypto markets, with volumes on offshore platforms like Binance and OKX dwarfing anything available to US-based retail participants. The officials warned that without a viable domestic regulatory pathway, that capital and the liquidity, tax revenue, and market data it generates will remain outside American jurisdiction.

"Overly burdensome rules will keep a $90 trillion perps market offshore."

Former SEC and CFTC officials

The timing is deliberate. Congress is in legislative recess, and the Clarity Act, formally known as the Digital Commodity Exchange Act, remains stalled. The bill has been the primary vehicle for resolving the long-running jurisdictional dispute between the SEC and CFTC over which agency governs which crypto assets and trading products. Its repeated failure to advance reflects genuine disagreement on Capitol Hill about regulatory philosophy, not merely procedural delay. With no legislative resolution imminent, the former officials appear to be building a public case for executive or agency-level action in the interim.

Their argument centers on custody frameworks as much as derivatives rules. Institutional participation in domestic crypto derivatives markets is constrained not only by trading restrictions but by the absence of clear, permissive standards for holding digital assets. Without those standards, large asset managers and hedge funds face legal ambiguity that effectively pushes them toward offshore structures or abstention. The officials contend that a lighter, principles-based framework, closer to the CFTC's traditional commodities approach than the SEC's securities enforcement model, would unlock that participation.

The counterarguments deserve serious weight. Crypto perps markets carry structural risks that regulators in other asset classes have spent decades learning to manage. Leverage ratios on offshore platforms routinely reach 50x or 100x for retail traders, and liquidation cascades during volatile periods have caused billions in losses. Bringing those products onshore without robust margin requirements, position limits, and investor suitability standards could expose domestic retail participants to the same hazards, just under an American regulatory banner.

Critics also note that the offshore market's scale may reflect factors beyond regulatory arbitrage. US tax treatment of crypto derivatives, reporting requirements, and institutional risk preferences all play roles that a lighter regulatory framework alone would not resolve. There is also the matter of perspective: former agency officials advocating for deregulation in industries they once oversaw face reasonable questions about whether their current professional relationships shape their policy positions.

The jurisdictional question itself remains unresolved in ways that matter practically. Whether a given crypto derivative is a security or a commodity determines which agency has authority, which disclosure rules apply, and which enforcement tools are available. The Clarity Act was designed to draw that line legislatively. Without it, any agency-level guidance risks legal challenge, and market participants remain reluctant to commit capital to domestic structures that could be reclassified by a future administration or court ruling.

The contrast with other jurisdictions is instructive. Japan's financial regulators are already working to streamline frameworks for digital asset products, while the UK has begun quantifying its domestic crypto market in ways that inform targeted policy. The US, by contrast, is still debating first principles.

The $90 trillion figure is striking, but context matters. That number represents cumulative notional trading volume across global perps markets, not open interest or assets under management. It illustrates the scale of activity, not the size of capital at risk at any given moment. Still, the directional point holds: the US is largely absent from the fastest-growing segment of global crypto trading, and the regulatory environment is the primary reason. Whether the solution is the lighter framework these former officials advocate, or a more structured onboarding process with robust consumer protections, is a question Congress will eventually have to answer. The longer the Clarity Act sits idle, the more that $90 trillion figure becomes a standing argument for someone else's approach.