CFTC Opens Settlement to Trust Companies, Drawing Bank Pushback

By Elena Vasquez

On November 5, the U.S. Commodity Futures Trading Commission issued a no-action letter allowing derivatives clearing organizations to use qualifying trust companies for daily settlement operations, according to Cointelegraph’s November 10 report. The conditional relief followed Nodal Clear’s October 29 request and opens work that CFTC rules had confined to banks.

What does the no-action letter change?

The U.S. Commodity Exchange Act permits customer funds to be held at banks or trust companies, although CFTC rules defined settlement banks only as banks. The November 5 letter lets derivatives clearing organizations use trust companies that satisfy the same evaluation and supervisory standards applied to existing settlement banks.

That eligibility extends to a settlement function involving daily profit-and-loss transfers among clearing members. Because the action is a conditional regulatory exemption rather than a formal rule change, it does not rewrite the rules on a permanent basis. In plain terms, qualifying trust companies can perform daily settlement work now.

How large is the derivatives settlement market?

CME Group’s average daily cleared cash transfers reached $8.7 billion in the first half of this year, up from $6.7 billion a year earlier. The $2 billion difference amounted to nearly 30% of the prior figure.

The $8.7 billion figure shows the scale of daily cash movements among clearing members, not revenue earned by settlement institutions. That distinction prevents the figure from serving as a proxy for the new market’s profitability. The market is large enough that settlement access matters, but the data do not show how profitable the channel would be.

Which crypto firms are expanding around settlement?

• Nodal Clear said last year it would work with Coinbase to introduce the stablecoin USDC into U.S. futures trading.
• BitGo launched its Global Markets division on November 4, combining derivatives trading, financing, collateral management and settlement.
• Coinbase gained the ability on November 6 to provide digital-asset custody services through a separate federally supervised trust bank.

These announcements place several crypto firms across trading, financing, collateral and custody operations. That breadth could make the CFTC settlement route more valuable to companies already building adjacent financial-services businesses, but it does not amount to regulatory approval of the wider expansion. The source provides no adoption, volume or revenue figures, so the commercial scale remains unproven.

Why are banks challenging crypto firms?

Traditional banks are contesting crypto firms’ broader entry into finance. In October, the Independent Community Bankers of America sued the Office of the Comptroller of the Currency, arguing that crypto firms can perform bank-like activities without assuming the same regulatory obligations as conventional banks.

Unlike the CFTC action, that lawsuit concerns the OCC and the wider regulatory perimeter for bank-like services. No court order suspending the November 5 settlement letter appears in the report, so the litigation and CFTC relief remain separate tracks. Bank litigation may reshape crypto regulation, but it is not the same case as the settlement exemption.

Can the exemption survive political turnover?

The relief rests on a no-action letter, not a completed rulemaking. Jordan Yagel, a lawyer at Buchanan Ingersoll & Rooney, said the letter "could be withdrawn if the CFTC leadership changes." He said formal revision of the rules would be necessary for long-term policy stability.

The political backdrop adds a second source of uncertainty. Democrats won majorities in both chambers in the U.S. midterm elections on November 3, and the new Congress takes office in January, when oversight of the CFTC could intensify.

The CFTC currently operates under Chairman Michael Selig alone. Filling four vacant commissioner positions could alter the agency’s regulatory direction and, in turn, affect any expansion of trust-company derivatives settlement. The new Congress starts in January, and those four appointments could test the durability of the November 5 settlement relief.