US: CFTC approves leveraged Bitcoin spot trading

On 4 December, the US Commodity Futures Trading Commission (CFTC) marked a "historic milestone" by approving for the first time spot trading of Bitcoin and other cryptocurrencies on margin (leverage) on federally regulated exchanges.

This regulatory signal integrates digital assets into the CFTC framework that already regulates futures and options, offering central clearing and established risk management mechanisms.

The then Acting Chairman, Caroline Pham, has stressed that this move offers Americans "safe US markets now, not offshore platforms that lack basic safeguards against uncontrolled losses for customers."

The End of Exile and the Great Bifurcation

For 15 years, the absence of regulated exchanges for leveraged spot forced the entire margin retail market to migrate to offshore jurisdictions like the Seychelles. The demise of platforms such as FTX has exposed the vulnerabilities of this highly leveraged, minimally supervised model.

The CFTC's approval does not eliminate offshore platforms, but formalises a structural division, dubbed the 'great bifurcation'. One market will remain offshore, highly leveraged and high risk, for the 'degen' retail trader seeking minimal friction.

The other will develop onshore, with lower leverage, central clearing and portfolio margining, serving banks, hedge funds and sophisticated proprietary traders.

Pham stated that the broader policy objective, in line with the President's plan Trump for digital assets, is to "regain [America's] place as a world leader in digital asset markets."

Institutional Advantages: Portfolio Margining

The technical mechanism is crucial: the approval enables the clearing of spot products through a central clearing house (CCP). This enables portfolio margining for Bitcoin.

In the previous regime, a trader buying Bitcoin spot on a US exchange and selling Bitcoin futures at the CME had to post full collateral in both places. The new model allows the CCP to treat the two positions as a single hedged portfolio, reducing the capital required.

Crypto analyst Shanaka Anslem estimates that the cross-margining between spot and derivatives could reduce capital requirements by 30-50%.

Bitnomial is the first exchange to gain this specific approval. However, the channel opening is wide enough for larger 'tankers' such as CME Group and ICE.

Bitnomial launches the first CFTC-regulated spot cryptocurrency exchange in the U.S., has reported Bitnomial on X

Nate Geraci, president of Nova Dius Wealth, believes the new regime "fundamentally paves the way for any major brokerage firm to offer spot cryptocurrency trading and feel comfortable from a regulatory perspective."

This includes traditional finance giants such as Vanguard, Charles Schwab and Fidelity, which collectively manage over $25 trillion

Focus On Institutional Migration

The expectation that retail liquidity will migrate immediately is misleading, as CFTC-regulated platforms will likely limit leverage to single digits and require full KYC checks. The highly leveraged segment will remain offshore.

However, the activity moving onshore is the basis trade and other institutional strategies. For years, hedge funds have executed long spot/short futures positions with significant counterparty risk in offshore venues.

Adam Livingston, analyst Bitcoin, points out that this regulatory green light makes Bitcoin 'allocable' for pension funds, insurance companies and banks.