Breaking the Ice on Cryptocurrency Regulation in the US: CFTC's 12-Person "Innovation Alliance"

In December 2025, an unusual “peace agreement” and “alliance” quietly took shape within the U.S. financial regulatory system. Policymakers in Washington, D.C., are attempting an unprecedented approach to confront the disruptive challenges brought by digital assets.

1. A Carefully Curated “All-Star” List

● On December 11, Acting Chair Caroline Pham announced the official formation of the “CEO Innovation Committee under the Digital Asset Market Advisory Committee.” Although the name is somewhat lengthy, this organization has already sent shockwaves through both Wall Street and the crypto world due to its initial members.

This 12-person list is a meticulously designed balance:

● Traditional Pillars: Leaders from major conventional financial institutions such as Teri Duffy, CEO of CME Group, and Adena Friedman, CEO of Nasdaq, are included. They represent the core interests and century-old experience of the existing regulated markets, symbolizing financial stability.

● Native Crypto Powerhouses: CEOs from leading cryptocurrency exchanges like Kraken, Gemini, and Crypto.com occupy key positions. They bring firsthand experience with innovative products such as perpetual contracts and 24/7 nonstop trading, highlighting realities that regulators must face.

● Frontline “Breakthrough” Innovators: Most indicative are the inclusion of prediction market platforms Polymarket and Kalshi. Both have garnered attention for operating in regulatory gray areas, and their founders have been directly invited into the meeting room. This strongly suggests that regulators do not aim to suppress but rather to clarify and integrate such cutting-edge innovations.

This list deliberately avoids exclusive “crypto circle” or “traditional circle” gatherings, focusing instead on one key word: dialogue.

2. Strategic Intent: From “Building Walls” to “Building Roads”

● The CFTC’s move marks a strategic shift in regulatory philosophy. In the past, regulators and emerging industries were often seen as engaging in a “cat-and-mouse game,” with one building high walls while the other sought gaps. The formation of the “CEO Innovation Committee” is more akin to inviting the industry’s main “road builders” to collaboratively draw up a future set of traffic rules.

● Behind this shift are profound practical pressures. The crypto market and its derivatives are rapidly expanding worldwide, but the U.S. regulatory framework remains fragmented, with jurisdictional uncertainty between the SEC (Securities and Exchange Commission) and the CFTC. This uncertainty has significantly hindered the U.S. in attracting crypto innovation and capital. Several bipartisan proposals in Congress aim to explicitly expand the CFTC’s oversight of the spot digital asset market. This move by the CFTC can be seen as a “capacity warm-up” and “consensus reserve” for potential new statutory authority.

● By bringing the industry’s most core and challenging participants into an official advisory framework, the CFTC aims to achieve multiple objectives:

1. Directly acquire cutting-edge market insights to prevent regulation from being disconnected from reality;

2. Resolve potential major disagreements early in policy design, enhancing future enforceability;

3. Demonstrate America’s integration and leadership in regulatory innovation amid international competition.

4. A Subtle Moment and Consideration of “Policy Legacy”

● The committee’s establishment occurs during an exceptionally delicate power transition. Its main advocate and acting chair, Caroline Pham, is a recognized proponent of regulatory innovation. She has repeatedly emphasized that regulators must proactively understand technology rather than react passively after the fact. This committee embodies her personal management philosophy.

● However, Pham’s term is about to end. The new chairman, nominated by President Trump, Michael Selig, has been approved by the Senate Agriculture Committee and awaits full Senate confirmation. Selig has experience handling crypto cases at the SEC and is viewed as a pragmatic figure.

Therefore, the rapid establishment of this committee on the eve of the outgoing chair’s departure is widely interpreted as Pham’s attempt to leave a “policy legacy”—creating an institutionalized high-level dialogue mechanism that, regardless of the successor’s preferences, will be difficult to bypass or dismantle, given its composition of top industry leaders.

● This also casts uncertainty over the committee’s future. Will the new chair fully support and prioritize it? Or will they adjust its agenda or even marginalize it? Such leadership changes introduce variables that must be considered when assessing whether the committee can produce tangible results.

4. Six Core Issues: Confronting the Most Difficult Questions

The committee is not engaging in superficial discussion. Its focus is precisely locked on six specific and highly challenging frontier areas, each directly questioning the current regulatory framework:

1. Tokenization: How to regulate on-chain tokens backed by physical assets (such as government bonds, real estate)? This concerns the compliance pathway for tokenizing trillions of dollars worth of traditional assets.

2. Crypto Assets: While the SEC emphasizes their “security” attributes, how does the CFTC define their “commodity” jurisdiction? This is at the core of jurisdictional division.

3. 24/7 Trading: How will financial infrastructure, risk monitoring, and personnel adapt to a market that never closes? This fundamentally disrupts the traditional system built around “business days.”

4. Perpetual Contracts: These derivatives, unique to crypto markets with no expiry and settled through funding rates, have risk structures vastly different from traditional futures and require a new regulatory toolkit.

5. Prediction Markets: The boldest issue. Should and how can prediction markets involving political or sports events be regulated as legitimate financial derivatives? This intersects finance, law, and social policy.

6. Blockchain Infrastructure: How should regulatory standards be set for underlying “pipelines” like trading clearing and asset custody? This forms the foundation of the entire market’s safe operation.

Presenting these six challenging questions simultaneously indicates that the CFTC intends to undertake a systemic framework reconstruction rather than piecemeal regulation.

5. From Dialogue to Results: The Long Road Ahead

The establishment of the committee is just the beginning. Moving from dialogue to consensus and then to enforceable regulatory frameworks is a long and arduous journey.

● Details such as when the first meeting will be held, whether it will be open or closed, and whether the discussions will be transparent have yet to be announced. Even more uncertain is the form of its outcomes: Will it issue a non-binding industry white paper, propose specific legislation to Congress, or push for the CFTC’s own pilot regulatory rules?

● Market expectations and concerns coexist. On the one hand, this signals a positive regulatory attitude, providing the industry with a high-level direct communication channel. On the other hand, interests among major players vary—traditional exchanges emphasize fair competition, crypto platforms seek regulatory recognition, prediction markets desire legitimacy. Whether the committee can reach consensus or merely become another forum for idle talk remains to be seen.

In any case, the formation of the “CEO Innovation Committee” by the CFTC has rewritten the narrative of crypto regulation in the United States. It is no longer a simple story of “regulation versus deregulation,” but rather the beginning of a more complex and constructive chapter: how regulators and the regulated can collaboratively build the first protective barriers in a rule vacuum.

The success or failure of this experiment will not only determine the competitiveness of the U.S. market but may also serve as a key model for global financial governance in the digital age.

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