CFTC unveils twin crypto rule proposals as regulatory catch-up accelerates
The U.S. Commodity Futures Trading Commission has proposed a pair of related rules intended to establish a comprehensive framework for cryptocurrency oversight, marking the derivatives regulator’s most significant step yet towards providing the industry with what Chairman Mike Selig described as “clear rules of the road”.
The proposals, announced on Monday, would bring crypto activity involving leverage, margin or financing squarely within the CFTC’s regulatory perimeter. They would also create a new category of registered platform known as a crypto asset market, or CAM, a narrower form of the existing designated contract market registration that already covers several major crypto exchanges.
“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 and Regulation Crypto Asset Markets,” 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.”
The move is the derivatives regulator’s answer to a problem that Congress has so far failed to solve. The Digital Asset Market Clarity Act, which would have closed the most glaring gap in American crypto oversight, stalled in the U.S. Senate last month. Since that legislative setback, both the CFTC and its larger sister agency, the Securities and Exchange Commission, have been pushing forward with policy work of their own.
What the rules would actually do
The CFTC is pursuing two regulatory pathways that agency officials describe as a comprehensive framework. One directly governs transactions. The other governs the firms hosting the activity.
Under the transaction-focused rule, any crypto trading associated with leverage, margin or financing would fall into the CFTC’s world. A trader using borrowed funds to amplify a position, for example, would be operating under federal derivatives oversight rather than in the looser regime that currently governs much of the spot market.
The second rule establishes the crypto asset market registration category. This is a deliberately narrower designation than full designated contract market status. Several major platforms already hold DCM registrations, including Coinbase, Crypto.com and Bitnomial, along with the prediction markets Kalshi and Polymarket. Firms that want to offer futures, swaps and options will still need the full DCM stamp. The CAM category is designed for platforms offering the leveraged and financed crypto activity the CFTC is now reaching for, without requiring them to build out the full derivatives apparatus.
Both proposals will now open for a 60-day public comment period. Agency officials said they are not yet sure what the scale of the remaining unregulated spot market will be until they hear from industry during that window, though they suggested that consumers may prefer to do business in the federally regulated space once it exists.
The officials also indicated that more rulemaking is coming. Selig wants to further cement earlier staff guidance on crypto matters into formal agency policy, according to the officials, which suggests Monday’s announcement is the beginning of a sequence rather than a single intervention.
The spot-market problem that will not go away
For all the breadth of the new framework, a significant hole remains. The CFTC has no statutory authority over spot markets, the direct trading of crypto in which assets change hands in their original form at current market prices, without any leverage or margin involved. That covers the unvarnished buying and selling of the largest swath of crypto tokens, including bitcoin and ether.
There is one exception worth noting. The CFTC retains its power to police fraud and manipulation in those markets, a backstop it has used repeatedly over the years. But beyond that enforcement authority, the new rules cannot touch or replace the patchwork of state money-transmission regulations that currently govern direct trading in the United States.
Agency officials acknowledged that firms wanting to offer more complex products would do so through the tailored, CFTC-regulated platforms. But simple spot trading, the activity that most retail crypto users engage in most of the time, remains outside the federal perimeter.
This is precisely the gap that the Digital Asset Market Clarity Act was designed to close before it stalled in the Senate. The failure of that bill has left the two agencies to improvise within their existing statutory powers, and the CFTC’s improvisation is necessarily limited by the boundaries Congress drew decades ago, long before crypto existed. Until Congress acts, the fundamental question of who regulates a plain spot crypto trade in America remains unanswered at the federal level.
The market implications are mixed. Platforms offering leveraged products gain a clear federal pathway, which should reduce the compliance guesswork that has characterised the sector since the collapse of the enforcement-first approach. But exchanges whose core business is simple spot trading face continued ambiguity, and the continued reliance on state-by-state money transmission rules keeps a layer of fragmentation that national operators have long complained about.
Two agencies, two Republican-led commissions
The CFTC’s move brings it closer to the SEC, which had moved well ahead on crypto policy in recent weeks. The securities regulator proposed a rule late last week on how investment firms should maintain custody of crypto assets, and it has implemented an exemption that clears the way for securities tokenisation. With Monday’s actions, the derivatives agency is catching up.
Earlier this year, the two agencies worked together to issue what they called a token taxonomy, the first serious attempt to define clearly which assets fall under the SEC’s authority and which fall under the CFTC’s. That joint exercise now appears to be the foundation for a coordinated, if incomplete, regulatory architecture built agency by agency rather than through legislation.
The governance of both bodies is unusual. Both are currently led by only Republican commissioners, because President Donald Trump has not yet offered nominees to fill each five-member commission. At the SEC, that means Chairman Paul Atkins and Commissioner Mark Uyeda are the entire commission. At the CFTC, Selig has been the sole commissioner for nearly a year, effectively taking unilateral actions akin to agencies established with a single director.
That concentration of power cuts both ways. It has allowed both agencies to move quickly, unencumbered by the partisan deadlock that often stalls multi-member commissions. But it also means the resulting rules carry a distinctly personal imprimatur, and a future commission with a full complement of members, potentially including Democrats, could revisit or reshape them. Industry participants weighing long-term compliance investments will have to price in that political risk alongside the legal one.
For more on the agencies shaping American crypto policy, see our regulation coverage.
Analysis: a framework built on borrowed authority
The CFTC has done what it can with the tools it has. By anchoring its jurisdiction in leverage, margin and financing, the agency has stretched its existing derivatives authority to cover a substantial slice of crypto activity, and the new CAM registration category gives exchanges a genuine federal licence to pursue. The message to the market is that the era of regulating by enforcement is being replaced, at least in this corner of the industry, by codified rules.
Yet the strategy has a structural ceiling. The CFTC cannot conjure spot-market authority out of rulemaking, and the largest volume of retail crypto trading sits exactly where the agency cannot reach. The SEC’s parallel efforts address custody and tokenisation, but the core jurisdictional question, which agency owns a plain spot trade and under what statute, remains a matter for Congress. Until the Senate revives something like the market clarity legislation, the United States will have a federal framework with a hole in its centre, held together by fraud enforcement powers and state money-transmission rules.
The 60-day comment period will be the next signal to watch. How the industry characterises the size of the remaining spot market, and whether consumer behaviour shifts towards the federally regulated venues as officials predict, will shape the final rules. So will the pace at which the White House fills the empty commission seats. For now, the direction of travel is clear: both agencies are building the regulatory scaffolding Congress declined to provide, and doing it faster than almost anyone expected a year ago.
