FCC tightens submarine cable rules, fast-tracks approvals for US firms

The Federal Communications Commission just put submarine cables, the actual physical backbone of the global internet, under a regulatory microscope. The agency unveiled new rules on June 3 that would, for the first time, require operators of Submarine Line Terminal Equipment (SLTE) to obtain FCC licenses.

Here’s why that matters: submarine cables carry 99% of international internet traffic. Every crypto trade routed through an overseas exchange, every cross-border stablecoin transfer, every piece of data flowing between continents travels through these undersea fiber optic lines. The FCC wants to make sure none of that infrastructure relies on equipment from Chinese companies or other foreign adversaries.

What the new rules actually do

The draft Second Report and Order targets a regulatory gap that’s existed for decades. While the cables themselves have been subject to FCC oversight, the terminal equipment on either end, the hardware that lights up those fiber strands and routes traffic, has operated in a licensing gray zone. That’s about to change.

The rules also systematically exclude equipment and services from companies on the FCC’s Covered List. That means Huawei, ZTE, and HMN Tech are effectively locked out of US submarine cable infrastructure. No exemptions. No grandfathering of existing equipment. A clean break.

This builds on actions the FCC took in August 2025, which introduced a presumption of denial for applications involving foreign adversary entities. The new proposals go further by removing any ambiguity about whether Chinese state-linked vendors can participate in any part of the submarine cable supply chain touching US interests.

The vote is scheduled for June 25.

Who benefits and why it matters for tech infrastructure

The flip side of restricting foreign adversaries is accelerating approvals for trusted domestic players. The FCC’s framework is explicitly designed to fast-track the regulatory process for US companies building out submarine cable networks.

The biggest beneficiaries are the hyperscalers. Companies like Meta and Google have been pouring resources into undersea cable projects to support their cloud computing and AI operations.

The crypto and digital asset angle

The FCC’s announcement doesn’t mention crypto or blockchain once. But cryptocurrency markets operate on a global, 24/7 basis. The infrastructure that enables a trader in New York to interact with a DeFi protocol hosted on servers in Singapore runs through submarine cables. The security and reliability of that infrastructure directly affects latency, uptime, and ultimately the integrity of cross-border digital asset transactions.

The institutional adoption of crypto has made digital assets increasingly dependent on the same cloud and data center infrastructure that hyperscalers are building out. When BlackRock runs a Bitcoin ETF or a major bank offers crypto custody, they’re relying on the same data pipes that the FCC is now working to secure and expand.

What investors should watch

The June 25 vote is the immediate catalyst. If the rules pass as proposed, expect a reordering of the submarine cable supply chain that plays out over months and years, not days.

Companies specializing in submarine cable manufacturing and installation that aren’t on the Covered List stand to gain market share. The pool of eligible suppliers just got smaller, which typically means more pricing power and larger order books for those who remain.

The risk sits on the other side of the equation. Restricting suppliers could introduce bottlenecks in cable manufacturing and deployment. If demand for new submarine cables outstrips the capacity of non-Chinese suppliers, projects could face delays and cost overruns.

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