CFTC Proposes Rules to Regulate Crypto Leverage Trading
(Bloomberg) — The Commodity Futures Trading Commission unveiled a proposal Monday to regulate digital asset transactions and markets.
If finalized, the measure would draw on the agency’s existing authority to regulate leveraged crypto trades offered to retail customers. It would also establish a new category for crypto exchanges offering the leveraged trades to register with the agency.
“The American people deserve clarity, certainty, and consumer protections in the crypto asset markets and the agency is committed to delivering this by incorporating crypto asset transactions into its uniform national market regulatory framework,” Chairman Michael Selig said in a statement.
Leveraged, financed or margin trading allows traders to borrow funds to potentially multiply their gains along with possible losses.
The CFTC will take public comment on the measure for 60 days.
The proposal is a part of an effort to bridge a regulatory gap left after a bipartisan group of senators blocked the so-called Clarity Act. The crypto market structure bill would have granted the CFTC authority to regulate trades of digital assets deemed commodities.
The heads of the CFTC and the Securities and Exchange Commission have vowed to push forward with their own moves in the absence of legislation, with the acknowledgment that rules could be more easily undone than law by a future administration. However, the Trump administration is hoping that companies will adopt the measures they put in place and make it more difficult for future administrations to roll back the regulations.
A number of crypto exchanges already offer leveraged or financed trading, including Coinbase Global Inc. and Crypto.com. Robinhood Markets Inc. is also preparing to offer perpetual futures, which have no expiration date, on select cryptocurrencies, with as much as 10 times leverage on some contracts.
Read More: Robinhood Debuts Weekend Trading, Perpetual Futures in US
Exchanges that want to also offer crypto perpetuals or crypto-linked prediction markets could still seek registration as standard designated contract markets, the agency’s general designation for derivatives exchanges.
