The U.S. Commodity Futures Trading Commission has opened a consultation on two crypto regulatory frameworks, Regulation CTX and Regulation CAM, with written comments due within 60 days of publication in the Federal Register.
Summary
- The CFTC is seeking feedback on rules for leveraged, margined, or financed retail crypto transactions.
- Regulation CAM would create a crypto-specific category within the agency’s designated contract market registration system.
- Chair Michael Selig said mandatory registration for all crypto exchanges would require congressional action.
- The consultation follows a Sep. 17 White House submission and the Senate’s failed CLARITY Act vote.
The CFTC announced on Oct. 5 that its advance notice of proposed rulemaking seeks public input on a federal framework under Section 2(c)(2)(D) of the Commodity Exchange Act. According to the agency, the notice concerns retail commodity transactions involving crypto assets, which it calls crypto asset transactions, or CTXs.
In the announcement, the commission said comments would inform potential future action, including rulemaking, rather than put a completed framework into effect. The agency requires written submissions within 60 days of the notice’s Federal Register publication and will post received comments on Regulations.gov.
CFTC crypto rules would offer a federal registration option
In an Oct. 5 opinion article, CFTC Chair Michael Selig said Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets would set requirements for registered exchanges offering crypto trading. He described the framework as an option for firms seeking a single federal market regulator.
According to Selig, participating exchanges could offer retail customers margined, leveraged or financed crypto trading, activities he distinguished from ordinary spot transactions on state-licensed platforms.
On compulsory registration, Selig wrote:
“We don’t have the authority to impose such a requirement without congressional action.”
The chairman said agency rules could address some gaps in crypto market structure, but could not indefinitely replace a framework enacted by Congress. In his account, state money-transmitter laws vary and were designed for payment services, while federal trading rules address manipulation, conflicts of interest, orderly markets and customer funds.
Using FTX as an example, Selig said its founders misappropriated approximately $8 billion in customer money. He contrasted the bankrupt offshore and state-regulated entities with its CFTC-registered subsidiary, where he said customer property remained segregated and secure.
Regulation CAM would tailor exchange requirements to crypto
During remarks at Fordham Law’s Blockchain Regulatory Symposium on Oct. 5, Selig explained how registration would work for different trading platforms.
For exchanges already registered as designated contract markets, the chairman said tailored rules could allow CTX trading. Firms seeking to offer only CTXs could pursue ordinary designated contract market registration or the proposed crypto asset market category, known as CAM.
Under Selig’s description, CAM exchanges would follow statutory designated contract market core principles through regulations adapted to crypto transactions. Exchanges offering futures, options or swaps would remain subject to the existing designated contract market framework.
For American customers, Selig said the model would identify platform protections. He described ordinary spot exchanges as generally subject to state money-transmission laws and CFTC fraud and manipulation powers.
In discussing listing safeguards, Selig identified token distribution, concentrated holdings, lockups, vesting schedules, programmed issuance and buybacks as factors relevant to manipulation risks. He also said the contemplated rules include a proof-of-reserves obligation for exchanges holding customer property in pooled accounts.
Public feedback would shape trading safeguards
Through its consultation, the CFTC is asking how a national regime could prevent abusive practices in crypto markets. The commission also seeks views on crypto-specific information that would help participants comply with requirements attached to CTXs.
Drawing on its oversight experience since 2014, the agency said it wants input on practices commonly accepted in the industry that it has found useful for regulatory compliance. A separate part of the notice asks how to establish the CAM registration subcategory through rulemaking.
The initiative had already entered executive review last month. As crypto.news reported on Sep. 18, the CFTC submitted its framework to the White House Office of Information and Regulatory Affairs on Sep. 17.
According to that report, the filing carried the title “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets.” OIRA, part of the Office of Management and Budget, reviews significant regulatory actions before publication.
Earlier coverage on Aug. 20 described the agency’s planned crypto rules as work that could proceed under existing powers even if lawmakers failed to pass market structure legislation. The report distinguished the CFTC’s derivatives oversight and spot-market enforcement powers from the full spot-exchange supervision contemplated by the CLARITY Act.
CLARITY Act stalled at a procedural Senate vote
In its Sep. 16 coverage of the failed Senate vote, the outlet reported that senators rejected cloture on the motion to proceed to H.R. 3633 by 49 votes to 50. The motion required 60 votes; senators did not hold a final passage vote.
According to that report, the bill would divide digital-asset responsibilities between the SEC and CFTC and establish registration routes for exchanges, brokers and dealers. Former CFTC Chair J. Christopher Giancarlo told journalist Eleanor Terrett on Sep. 16 that both regulators could continue developing frameworks under their current authority.
Following the vote, House Financial Services Committee Chair French Hill and House Agriculture Committee Chair Glenn Thompson supported agency action under existing law, while saying Congress alone could provide lasting statutory certainty, the report said.
The same coverage reported that Sen. Thom Tillis changed his vote to preserve the ability to seek reconsideration, leaving the House-passed legislation on the Senate calendar.
