On July 24, the CFTC announced that it was granting a no-action exemption to Small Exchange, owned by Kraken, for certain contract market actions. This no-action letter will give the platform more flexibility to restart regulated derivatives trading.
In a letter issued on July 24, CFTC staff granted temporary relief from the dormant DCM rules for small exchanges. Payward, Kraken’s parent company, acquired Small Exchange in late 2025. However, it remained inactive for over a year. Without this relief, he would have been lethargic and would have had to go through a long reinstatement process.
The no-action relief will allow the Small Exchange to list products and resume trading without any immediate fear of enforcement action if it complies with certain conditions and the October 2026 deadline. This will also help Kraken expand its regulated financial derivatives business in the US
the Official statement It stated, “The Division of Market Oversight of the Commodity Futures Trading Commission announced today that it has issued a no-action letter to Kraken Derivatives Exchange Inc., formerly known as Small Exchange Inc., a designated contract market, addressing certain dormancy-related actions. The no-action position is time-limited and subject to the terms and conditions contained in the Division’s no-action letter.”
CFTC Tending No-Action Letters to Kraken as Cryptocurrency Regulation Evolves
The no-action letter is a big relief for Kraken, which will allow the exchange to use the Small Exchange’s existing DCM status to more easily offer regulated futures and derivatives. This message will help Kraken expand its operations into traditional finance beyond cryptocurrency-based offerings.
Kraken is expanding its boundaries into different growing markets, e.g Token securities. Payward’s xStocks platform is now tokenizing Hong Kong-listed stocks, and is preparing to add UK, European and South Korean stocks. However, it still needs regulatory approval. This expansion follows its tokenized shares in the US and aims to give users around-the-clock on-chain access to global markets. It has also partnered with GTN to assist with implementation, custody and record keeping.
While Kraken is entering the new market, Kraken’s Fed main account remains unused a few months later. It is the Federal Reserve’s all-time primary authorized digital asset bank account. A limited “skinny” account allows direct access to federal payment systems but comes with limitations. Kraken has described it as a major achievement for its enterprise infrastructure. However, it is still under regulatory review.
Arjun Sethi, co-CEO of Payward and Kraken, said in a statement press release“With a Federal Reserve master account, we can operate not as a marginal participant in the US banking system, but as a directly connected financial institution. For Wyoming’s SPDI built on a full-reserve model, this creates a uniquely flexible foundation. It gives us the ability to settle directly on Fedwire, reduce reliance on correspondent banks, and integrate regulated fiat liquidity directly into digital asset markets.”
The CFTC relief follows a pattern of targeted relief for cryptocurrency companies. The agency has previously issued similar letters for event contracts and swap reports in order to balance innovation with appropriate regulatory oversight. These letters come with strict terms and deadlines, allowing agency staff to monitor results without rushing through new rules.
Earlier this year, Granted by the Commodity Futures Trading Commission (CFTC). No-action letter to Bitnomial Exchange, LLC, a designated futures market, and Bitnomial Clearinghouse, LLC, a registered derivatives clearing organization.
Kraken, one of the oldest, most liquid and secure cryptocurrency platforms, has launched a new range of options contracts on Bitcoin (BTC) and Ether (ETH), giving a broader base of professional and institutional clients access to a portion of the digital asset derivatives market that Kraken expects to expand meaningfully over the coming years.
On July 16, Kraken revealed the launch Options contracts on Bitcoin (BTC) and Ethereum (ETH). “Cryptocurrency options activity is still a fraction of what it is in traditional markets but the gap is narrowing as professional and institutional capital continues to move into digital assets,” said Alexia Theodorou, Director of Derivatives at Kraken.
