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Key Takeaways
- Regulation CTX would cover crypto transactions involving leverage, margin or financing, while Regulation CAM would create a narrower category of regulated trading venue.
- Direct spot trading without borrowed funds stays outside the proposals, though the CFTC keeps authority over fraud and manipulation in spot markets.
- The CFTC is catching up to the SEC, and both agencies operate without full commissions, with Chairman Mike Selig as the CFTC’s sole commissioner.
The Commodity Futures Trading Commission opened two rule proposals Monday aimed at establishing federal oversight of leveraged and margin-based crypto trading, an effort meant to address regulatory uncertainty left by Congress’s failure to pass comprehensive crypto market-structure legislation.
The proposals would not extend CFTC authority to simple, direct spot trading of crypto assets, leaving that activity governed primarily by state money-transmission law.
An Early-Stage Proposal Open for Public Comment
The CFTC issued the two measures, Regulation CTX and Regulation CAM, as an advance notice of proposed rulemaking, an early stage in the federal rulemaking process that precedes a formal proposed rule and is used to gather public input before the agency drafts specific regulatory text. The proposals are open for a 60-day public comment period.
Regulation CTX would govern crypto transactions themselves when they involve leverage, margin or financing, while Regulation CAM would establish a new category of CFTC-regulated trading venue called crypto asset markets, narrower in scope than the commission’s existing designated contract market registration.
Agency officials described the pair together as intended to form a comprehensive regulatory framework for that activity.
CFTC Chairman Mike Selig outlined the goal in remarks prepared for delivery at Fordham Law’s annual Blockchain Regulatory Symposium.
“Clear rules of the road for crypto asset markets.”
Selig said the rules would let crypto exchanges operate under uniform national CFTC oversight using the same statutory authority he said the prior administration had instead used to pursue a regulation-by-enforcement approach.
What the Proposals Would and Would Not Cover
The CFTC’s authority under the proposals is tied to leverage, margin and financing. Straightforward buying and selling of crypto assets such as Bitcoin and Ether at current market prices, without borrowed funds or margin, would fall outside the proposals’ scope.
It would remain governed primarily by state-level money-transmission regulation, with one exception: the CFTC retains authority to police fraud and manipulation in spot markets regardless of these proposals.
That gap was central to the market-structure debate during the Clarity Act’s consideration in the Senate, where closing it was a core objective of the bill.
Agency officials said they are not yet certain how much trading activity will remain outside direct CFTC oversight once the proposals are finalized, and said the 60-day comment period is intended partly to gather industry input on that question.
Officials suggested some consumers may ultimately prefer trading through CFTC-regulated venues once the new pathway is available.
Several major platforms, including Coinbase, Crypto.com and Bitnomial, along with prediction markets Kalshi and Polymarket, already hold designated contract market status with the CFTC. Firms seeking to offer futures, swaps or options would still need that full DCM registration; the narrower crypto asset market category proposed Monday is a separate, more limited option.
Catching Up to a Faster-Moving SEC
The CFTC’s move follows the Securities and Exchange Commission, which has advanced further on its own crypto rulemaking agenda in recent months, including a proposal on crypto custody standards for investment firms issued the prior week and an exemption allowing tokenized U.S. stocks to trade on permissioned blockchain venues.
With Monday’s proposals, the CFTC is moving to close that gap, and agency officials signaled additional rulemaking is likely as Selig looks to formalize earlier staff guidance on crypto matters into binding rules.
Both agencies are currently operating without their full five-member commissions. The SEC has only Chairman Paul Atkins and Commissioner Mark Uyeda in place, while Selig has served as the CFTC’s sole commissioner for nearly a year, a vacancy that has left him making unilateral decisions typically reserved for a full commission vote.
Earlier this year, the two agencies jointly issued a token taxonomy defining for the first time how crypto assets would be classified as falling under SEC or CFTC jurisdiction. Monday’s proposals represent the CFTC’s effort to build out its side of that division with specific operating rules, following the SEC’s own parallel rulemaking on its side of the jurisdictional line.
Additional Details in the Proposed Framework
The proposed rules are grounded in retail-trading provisions of the Commodity Exchange Act established under the 2010 Dodd-Frank Act, the financial reform law passed following the 2008 financial crisis.
Crypto asset markets would face standards already applied to other CFTC registrants, including restrictions on listing products vulnerable to manipulation and proof-of-reserves requirements for platforms holding customer assets in pooled accounts.
Transactions under Regulation CTX would generally require a registered futures commission merchant to act as intermediary, bringing Bank Secrecy Act anti-money-laundering requirements into those trades, with an exemption for transactions involving actual delivery of the underlying asset within 28 days.
Selig also said the agency is examining protections for software developers who build crypto-related products without soliciting orders or holding customer funds directly.
“A person should not have to register as an introducing broker simply because that person shipped code.”
