Headline: Former SEC and CFTC officials urge lighter-handed rules to bring offshore crypto perpetuals back onshore As crypto market-structure legislation stalls in the summer lull, both the SEC and CFTC are moving ahead with rulemaking that could reshape trading and custody for the roughly $2.5 trillion industry. Regulators are tackling derivatives definitions and a long-awaited rewrite of the SEC’s custody rules — and a bipartisan cadre of ex-regulators is urging restraint, warning that overly burdensome rules will simply push lucrative markets overseas. Derivatives: drawing jurisdictional lines without driving business away In June, the SEC and CFTC asked the public how swaps, security‑based swaps and emerging products should be defined — and where jurisdiction between the two agencies should begin and end. That question is urgent for crypto because the CFTC is trying to bring perpetual futures trading onshore, a market many say fled U.S. oversight. A new comment letter from former senior officials — ex‑CFTC Chairman Chris Giancarlo, former CFTC commissioners Brian Quintenz and Sharon Brown‑Hruska, former SEC Commissioner Steven Wallman and former SEC Chief Economist Chester Spatt — urges the agencies to align rules so “similar risks face similar regulation” and to avoid overlapping requirements that would raise compliance costs. The letter’s bipartisan signatories note this isn’t a partisan issue, and their composition is notable given that neither regulator currently has bipartisan representation. The warning is practical: poorly calibrated regulation won’t eliminate demand for perps, it will move it offshore. Kalshi, a prediction‑market platform that this year began offering crypto perpetuals, estimates offshore perpetuals trading hit about $90 trillion in 2025, up from roughly $28 trillion in 2023. Kalshi sponsored the letter by retaining law firm Bellementis PLLC to help draft it; the former regulators say they were not paid and Kalshi did not influence the content. “The $90 trillion offshore perpetuals market isn’t a mystery to solve, it’s a market waiting for a sensible U.S. rulebook,” Giancarlo told Crypto In America. “If we calibrate federal regulation to actual risk instead of maximum burden, that liquidity comes onshore. Every year we wait, it gets harder to bring to America.” Political spotlight and onshore ambitions Bringing offshore perps into the U.S. has reached the Oval Office. President Donald Trump said CFTC Chair Michael Selig is working to bring popular offshore perps platform Hyperliquid into the United States — a sign of how high the issue has climbed politically. SEC custody rewrite heads to OIRA On the custody front, the SEC last week sent a planned revision of its custody rules for investment advisers and funds to the White House Office of Information and Regulatory Affairs (OIRA) for review. The industry has long sought clarity on how SEC‑regulated firms can custody digital assets while complying with federal securities laws. The new text is not yet public, so it’s unclear which custodians would qualify or what specific safeguards would be required. What is clear is the agency’s intent: the SEC says it wants to modernize and clarify crypto custody rules while removing provisions it now considers outdated. That marks a shift from the agency’s 2023 push under then‑Chair Gary Gensler for a sweeping “safeguarding” rule that would have broadened adviser custody obligations to virtually all client assets, including crypto — a proposal the SEC later abandoned. Reg Crypto moves forward Separately, the SEC’s “Reg Crypto” proposal — a framework to govern certain crypto asset offerings — has officially appeared in the Federal Register and is open for public comment through Oct. 20. Bottom line Both agencies are racing to define how derivatives and custody rules will apply to crypto. Former regulators are urging a lighter, risk‑calibrated approach to avoid exporting the market to offshore venues. With regulatory texts still being finalized and public comment windows open, the next months will be critical for shaping whether the liquidity in massive offshore perpetuals markets ever returns to U.S. trading venues. This piece is based on reporting from the Crypto In America newsletter by Eleanor Terrett. Follow her newsletter for the full writeup and updates. Read more AI-generated news on: undefined/news