CFTC Proposes New Federal Crypto Trading Rules

The CFTC published an Advanced Notice of Proposed Rulemaking on October 5, opening a public comment process aimed at building a federal regulatory framework for retail crypto asset transactions, including leveraged and margined spot trading. The proposed rules, called Regulation CTX and Regulation CAM, would create a new registration category called a "crypto asset market" specifically for exchanges offering these products under CFTC oversight.

"Today's action is a critical step in the CFTC's ongoing efforts to ensure America remains the crypto capital of the world," said CFTC Chairman Michael Selig. "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."

What the ANPRM is actually asking the public

The notice solicits comment on three specific areas: how the Commission can prevent abusive practices in crypto asset markets under a uniform national regime, how it can provide market participants with crypto-specific guidance on requirements and industry best practices the agency has identified since it began overseeing aspects of crypto markets in 2014, and how it might codify a dedicated subcategory of designated contract market registration purpose-built for these transactions.

The CFTC's 2014 reference point traces back to its early oversight of Bitcoin futures contracts and its ongoing enforcement actions against unregistered commodity pool operators dealing in crypto assets, well before most federal agencies treated digital assets as a distinct regulatory category. That institutional history matters here because it gives the CFTC a basis to claim accumulated expertise, distinct from the SEC's more recent and more combative posture toward crypto under previous leadership, when justifying why it should be the primary regulator for this category of retail transaction.

Comments must be submitted in writing within 60 days of the ANPRM's publication in the Federal Register, with all submissions posted publicly on Regulations.gov.

Why this framework can't force exchanges onto CFTC platforms

Selig was direct about the legal boundary of this proposal in a Wall Street Journal column. Regulation CTX and Regulation CAM would establish requirements for CFTC-registered exchanges that choose to offer crypto assets for trading, but they would not require crypto assets to trade exclusively on CFTC-registered platforms.

"We don't have the authority to impose such a requirement without congressional action," Selig wrote.

This distinction separates the CFTC's current approach from what the CLARITY Act would have accomplished had it passed. The CLARITY Act, which failed to clear a Senate cloture vote on September 15 with only 49 of the needed 60 votes, would have established a comprehensive statutory market structure spanning both SEC and CFTC jurisdiction, potentially with mandatory registration requirements written directly into law. Without that legislation, the CFTC's current authority under Section 2(c)(2)(D) of the Commodity Exchange Act lets it build a voluntary registration pathway, essentially offering exchanges an optional federal regulatory home rather than compelling them into one. State-licensed exchanges would remain a parallel, legally valid option under this framework.

How this fits the broader regulatory sprint after CLARITY's failure

This ANPRM is the latest in a series of moves both the CFTC and SEC have made since the CLARITY Act stalled in the Senate. The SEC released its Innovation Exemption in September, providing temporary conditional relief allowing tokenized NMS stock trading through permissioned automated market makers. The CFTC had separately sent a draft crypto rulemaking initiative to the White House for review in mid-September, a step that preceded this formal ANPRM publication.

That sequencing illustrates a deliberate pattern: both agencies appear to be using their existing statutory authorities to build regulatory infrastructure piece by piece, rather than waiting for Congress to resolve the jurisdictional disputes that have repeatedly stalled comprehensive legislation. Selig's emphasis on preventing fraud "rather than only prosecute after the fact" directly invokes FTX's 2022 collapse, which became the central cautionary example cited across nearly every subsequent crypto market structure debate in Washington, including during CLARITY Act negotiations where ethics and anti-fraud provisions became the sticking point that ultimately sank the bill.

Whether a crypto asset market registration category under CFTC oversight attracts meaningful exchange participation will depend heavily on how the final rules compare to existing state licensing regimes, particularly whether CFTC registration offers exchanges a genuine competitive or compliance advantage over operating under a patchwork of state money transmitter licenses, the model most US crypto exchanges currently use.

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