CFTC Proposes Pair of Rules to Govern Leveraged Crypto Trading and Exchanges
The U.S. Commodity Futures Trading Commission has proposed a pair of related rules to establish federal oversight of cryptocurrency activity involving leverage, margin or financing, marking the derivatives regulator’s most significant step yet toward building a comprehensive crypto framework in the absence of legislation from Congress.
The proposals, introduced on Monday, follow two regulatory pathways the agency intends as a “comprehensive regulatory framework,” according to agency officials. One rule directly governs transactions, while the other establishes a new category of regulated platforms known as crypto asset markets, or CAMs.
The CAM category would be a narrower form of the existing designated contract markets, or DCMs, that already sit under CFTC supervision. Crypto activity associated with borrowed funds, margin or other financing would fall squarely into the CFTC’s regulatory world under the new rules. Firms that want to offer futures, swaps and options would still need the full DCM stamp.
“Today, the CFTC is doing its part to deliver clear rules of the road for crypto asset markets with its advanced notice of proposed rulemaking on Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM),” CFTC Chairman Mike Selig said in remarks prepared for delivery at Fordham Law’s annual Blockchain Regulatory Symposium.
“These rules would codify a pathway for crypto asset exchanges to operate under uniform national oversight by the CFTC pursuant to the same statutory authorities that the prior administration instead utilized to regulate by enforcement,” Selig said.
The proposals will now open for a 60-day public comment period, giving the industry a window to shape the final rules and to signal how much of the market might migrate into the federally regulated space.
What the Rules Cover, and What They Do Not
The effort may nonetheless leave a significant gap, because the CFTC lacks authority to oversee spot markets, meaning the direct trading of crypto in which assets change hands in their original form at current market prices, without leverage or margin considerations. That includes the unvarnished buying and selling of the largest swath of crypto tokens, such as bitcoin and Ethereum’s ether.
There is one major exception. The CFTC can still police fraud and manipulation in spot markets, even where it cannot impose a full supervisory regime.
The agency’s new rules otherwise cannot touch or replace the states’ money-transmission regulations that govern direct trading. CFTC officials said firms that want to offer more complex products would do so through tailored, CFTC-regulated platforms, and they suggested that consumers may prefer to do business in the federally regulated space once it exists.
Officials said they are not yet sure what the scale of the remaining spot market will be until they hear more from the industry during the comment period.
The existing landscape of registered platforms gives a sense of the potential migration. Many major platforms are already registered as designated contract markets, including Coinbase, Crypto.com and Bitnomial, along with the prediction markets Kalshi and Polymarket. The new crypto subcategory would be narrower than full DCM status, offering a tailored route for firms that do not intend to list futures, swaps or options.
For exchanges weighing their options, the calculus now involves choosing between the lighter CAM registration and the fuller DCM licence, depending on the product mix they intend to offer. The comment period will be the first test of how attractive the new category proves to be.
A Regulatory Race After Legislative Stalemate
The CFTC’s move comes as both it and its larger sister agency, the Securities and Exchange Commission, race to fill the vacuum left by Congress. Closing the spot-market gap was at the core of the Digital Asset Market Clarity Act, which stalled in the U.S. Senate last month. Since that legislative setback, the two agencies have been moving forward on crypto policies to make up for the absence of a new U.S. market structure law.
The SEC had moved well ahead of the CFTC in proposing rules. Late last week it proposed a rule on how investment firms should maintain custody of crypto assets, and it has implemented an exemption that clears the way for securities tokenization.
With Monday’s actions, the CFTC is catching up, and officials suggested more will come later, because Chairman Selig wants to further cement earlier staff guidance on crypto matters into formal policy.
Earlier this year, the two agencies worked together to issue what they referred to as a token taxonomy, which for the first time tried to clearly define how they would characterise the assets falling either under the SEC’s or the CFTC’s authority. The taxonomy, combined with the new proposals, sketches the outline of a divided but coordinated regime: the SEC taking custody and tokenisation questions, the CFTC taking leveraged and margined trading.
The political backdrop is unusual. Both agencies are currently led by only Republican commissioners, because President Donald Trump has not yet offered any nominees to fill each five-member commission. At the SEC, that means Chairman Paul Atkins and Commissioner Mark Uyeda. At the CFTC, Chairman Mike Selig has been the sole commissioner for nearly a year, meaning he has been taking unilateral actions akin to agencies established with a single director.
That structure allows both agencies to move quickly, but it also means the rules rest on thinner political foundations than usual. A future commission with a full complement of members could revisit, amend or slow-walk elements of the framework, particularly if control of the White House changes hands.
Market and Regulatory Implications
For crypto trading firms, the proposals offer something the industry has sought for years: a defined federal pathway that does not depend on enforcement actions to establish the boundaries of permissible conduct. Selig’s framing, that the rules would use the same statutory authorities the prior administration “utilized to regulate by enforcement,” is a direct repudiation of that earlier approach and a signal to exchanges that registration, rather than litigation, is now the preferred route.
The leverage and margin focus matters commercially. Much of the trading volume on major crypto platforms involves some form of financing, and pulling that activity into a uniform national regime could reduce the patchwork of state-level obligations firms currently navigate. It could also raise compliance costs for platforms that have operated with lighter touch, particularly smaller venues without the legal infrastructure of a Coinbase or Crypto.com.
The unresolved spot question is the larger strategic issue. Direct, unleveraged trading of bitcoin and ether, the deepest and most liquid part of the market, would remain governed by state money-transmission rules rather than a federal regime. That split oversight could produce a two-tier market: federally regulated venues for complex and leveraged products, and state-regulated venues for simple spot trading. Whether that division holds depends heavily on consumer behaviour, which CFTC officials themselves acknowledged they cannot yet predict.
The stalled Digital Asset Market Clarity Act remains the missing piece. Until Congress acts, the CFTC’s fraud and manipulation powers over spot markets are the only federal backstop for direct trading, and the agencies are building their frameworks on existing statutory authorities rather than new legislation. The 60-day comment period, and the eventual final rules, will show whether regulators can deliver enough certainty to satisfy an industry that has spent years asking for exactly that.
The View from Here
The CFTC’s twin proposals represent genuine progress toward a workable federal regime for crypto trading, and the CAM registration category in particular gives exchanges a tailored option that did not previously exist. But the spot-market gap is not a technicality. It is the central fault line in U.S. crypto regulation, and no amount of agency rulemaking can fully close it without Congress.
What the proposals do achieve is a shift in posture. Regulation by enforcement is being replaced, at least at the CFTC, by codified pathways and public comment. If the SEC’s custody and tokenisation rules and the CFTC’s trading rules survive their comment periods and the eventual arrival of full commissions, the United States could end up with a functioning, if bifurcated, crypto regime. The alternative, another legislative stall followed by another enforcement cycle, remains entirely possible.
For now, the industry’s task is straightforward: engage in the 60-day comment window, decide between CAM and DCM registration, and watch the Senate for any revival of the market structure bill. Readers can follow developments in our regulation coverage as the comment period unfolds.
