CFTC seeks input on leveraged crypto trading rules
- Key insight: After a much-vaunted crypto market structure bill failed in the Senate last month, the Commodity Futures Trading Commission is moving ahead with a federal framework for leveraged crypto markets, and is seeking industry input into what that framework should look like.
- Expert quote: “Today’s action is just the beginning. The CFTC is starting the process of addressing gaps in crypto-asset market structure and creating clear rules of the road for innovators and market participants.” — CFTC Chair Michael Selig
- Forward look: With the CLARITY Act stalled, the CFTC and SEC have said they will pursue their own rules to clarify their respective responsibilities and create clearer registration pathways for exchanges.
WASHINGTON — The Commodity Futures Trading Commission on Monday sought public input on a potential federal regulatory framework for leveraged crypto trading, following through on a plan
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The agency’s advanced notice of proposed rulemaking outlines two complementary frameworks — Regulation Crypto Asset Transactions, or CTX, and Regulation Crypto Asset Markets, or CAM — that would establish rules for leveraged crypto transactions and the exchanges that offer them.
CFTC Chair Michael Selig
“Fortunately, the Commodity Futures Trading Commission and the Securities and Exchange Commission have the statutory authority to issue rules and regulations establishing a federal crypto regulatory market structure,” he said in a Wall Street Journal
The CFTC is seeking public comment from crypto firms to better understand industry practices and how existing regulatory requirements apply to crypto asset transactions. The agency also said the feedback would help inform consumer protections under a uniform national regulatory framework.
Stakeholders will have 60 days to submit comments after the advanced notice of proposed rulemaking is published in the Federal Register.
Selig said the potential rules would not require crypto assets to trade on CFTC-registered platforms because the agency does not have the authority to impose such a requirement without congressional action. Instead, the frameworks would give crypto exchanges the option to operate under a federal regulatory regime rather than navigate various state-level requirements.
“Unlike state-licensed exchanges, these exchanges would be permitted to allow retail customers to trade on a margined, leveraged or financed basis,” Selig said. “Such platforms are distinct from ordinary spot-trading venues and are squarely within the CFTC’s regulatory jurisdiction.”
Selig added that the notice is “just the beginning” of the agency’s effort to establish a regulatory framework for the crypto industry.
“The CFTC is starting the process of addressing gaps in crypto-asset market structure and creating clear rules of the road for innovators and market participants,” he said. “We haven’t solved every problem, nor can agency action substitute indefinitely for a statutory framework passed by Congress, but we must do what we can.”
With the CLARITY Act stalled, the CFTC and SEC have said they will pursue their own rules to clarify their respective responsibilities and create clearer registration pathways for exchanges and custodians.
The SEC also has begun taking steps on its own. In September, the agency issued an order allowing
Alongside the “innovation exemption,” the SEC proposed rulemaking in August that would
Industry insiders say rules adopted by the SEC and CFTC may not have the same permanence as legislation passed by Congress and could be more easily changed by future administrations.
