On Monday, Kraken Co-CEO Arjun Sethi joined leaders from ICE, CME, Nasdaq, Cboe, Kalshi, DRW and Polymarket on the SEC–CFTC Roundtable on platforms and market construction.
Moderated by former CFTC Commissioner Jill Sommers and SEC Division of Buying and selling and Markets Director Jamie Selway, the panel introduced collectively among the most influential voices in international markets. It was the primary joint roundtable performed with the SEC and CFTC in 14 years.
The dialog centered on a vital query: How can futures, equities, choices and digital-asset venues converge on constant requirements for execution, clearing, disclosure and investor entry with out slowing the tempo of innovation?
Our message was clear: Tokenization is infrastructure modernization, and harmonized guidelines are the bridge from at the moment’s fragmented methods to tomorrow’s open, environment friendly markets.
Why this roundtable issues
Chairman Atkins opened with a name for unified oversight: “The fragmented, convoluted system ends now.” CFTC Commissioner Caroline Pham echoed the sentiment, noting this was the primary joint SEC–CFTC roundtable since Dodd-Frank, marking “a brand new day” for cooperation.
That backdrop is vital. For many years, securities and derivatives markets have developed below separate statutes and mandates. As tokenization and digital belongings transfer into mainstream workflows, platforms and regulators face acquainted challenges in a brand new context: product classification, joint approvals, 24/7 operations, and danger administration.
Kraken’s perspective: Ideas that scale
Readability allows innovation
The largest unknown in tokenized markets shouldn’t be the know-how itself, however the guidelines of the street. With out clear steerage, merchandise stall or transfer offshore.
With readability, innovation accelerates. As Arjun emphasised in the course of the dialogue: “If we now have readability, we are able to really innovate. It’s laborious to innovate if there’s no readability. My greatest worry is we proceed to see speedy acceleration, speedy innovation exterior the U.S.”
Tokenization broadens entry and effectivity
Tokenized belongings can unlock liquidity in non-public credit score and actual property, cut back settlement friction, allow fractional possession, and develop participation. The goal is to open entry to the identical monetary services and products which might be too typically reserved for the few.
Safeguards should scale
Kraken’s perspective is that belief is constructed by assembly dangers with safeguards. Meaning clear valuation of underlying belongings, segregated custody and chapter remoteness, and secondary-market guidelines that help actual liquidity.
These are the identical ideas behind Kraken’s proof-of-reserves management and institutional-grade custody by way of Kraken Monetary.
Innovation exemptions are important
Some panelists pushed again on protected harbors. Arjun disagreed. “It’s very easy to say let’s not have innovation exemptions, however regulatory obstacles have been monopolistic and it’s been laborious to innovate.”
Managed exemptions with guardrails permit for experimentation whereas defending retail traders, permitting accountable actors to check and scale innovation. With out such exemptions, innovation will proceed to flourish overseas quite than within the U.S.
The U.S. dangers falling behind
When one panelist claimed the U.S. stays essentially the most revolutionary monetary market, Arjun pointed to DeFi. Pressed once more with “we’ve by no means actually misplaced,” he responded bluntly: “We’re dropping proper now.”
With out clear guidelines, innovation will proceed to flourish overseas quite than at house.
Key themes from the dialogue
Joint jurisdiction and product approvals
Present laws in Congress represents a once-in-a-generation probability to convey readability to digital belongings, simply as Dodd-Frank established a framework for derivatives. Our suggestion is easy: The SEC ought to oversee token financing, whereas the CFTC ought to regulate centralized intermediaries and token itemizing. Clear strains construct confidence and keep away from pointless complexity.
Product approval and innovation exemptions
A product-by-product method is unworkable. Broad, predictable requirements with scoped innovation exemptions are the way in which ahead. This permits accountable companies to experiment safely whereas offering regulators with the proof they should act.
24/7 buying and selling
Kraken already operates safe 24/7 markets globally. With pre-funded accounts, segregated custody, real-time margining and steady commerce surveillance, we now have confirmed it may be performed. Monetary markets ought to modernize to mirror at the moment’s always-on financial system, increasing entry and effectivity with out sacrificing stability.
Perpetuals and derivatives
‘Perpetual futures are already established globally. Kraken provides them below FCA regulation with strong safeguards, demonstrating that innovation can coexist with robust oversight. Kraken seems ahead to working with the CFTC to copy this mannequin within the U.S., with disclosures and guardrails tailored for retail.
Portfolio margining and interoperability
Businesses ought to acknowledge offsets throughout product courses and focus interoperability on portability of protections and reporting, quite than forcing an identical market designs.
Closing reflections
Arjun closed by noting how a lot has modified: “Excited to be right here – I wouldn’t have mentioned that two years in the past.” He pointed to the rising alignment between Congress, regulators and the Administration on market construction as essentially the most promising growth.
“Our perception is that market construction might help us higher serve our clients,” he mentioned. “We’re in a position to do extra with much less. To supply extra providers and extra capital again to our clients.”
For us, the aim is easy: Advocate for a rulebook that expands purchasers’ entry, raises requirements for intermediaries and empowers innovation throughout the U.S.
