CFTC Advances Federal Crypto Trading Rules After CLARITY Act Stalls
The U.S. Commodity Futures Trading Commission (CFTC) has taken a step toward regulating retail crypto trading after Congress failed to pass the CLARITY Act. On October 5, the agency released an Advanced Notice of Proposed Rulemaking, focusing on leveraged, margined, and financed retail crypto transactions under the Commodity Exchange Act.
The proposal aims to create a new category called "crypto asset markets," allowing qualifying exchanges to opt into federal oversight. Platforms participating in this category would likely face requirements like proof-of-reserves, anti-manipulation controls, and customer protection rules. The CFTC has not set a single leverage limit, requiring each arrangement to undergo individual review.
The move follows the stalled Senate vote on the CLARITY Act in September, which would have granted the CFTC broader authority over spot digital commodity trading. CFTC Chairman Michael Selig emphasized that the CFTC and the Securities and Exchange Commission (SEC) already possess sufficient authority to begin building a federal crypto framework.
Critics, including the advocacy group Better Markets, argue that the CFTC is the wrong agency to regulate retail crypto due to its lack of an investor protection mandate. Benjamin Schiffrin, director of securities policy at Better Markets, expressed concerns about potential affiliations between market participants, citing the collapse of FTX as an example. Meanwhile, Nate Geraci of NovaDius Wealth Management supports clear rules, suggesting that the CFTC and SEC may need to step in if Congress does not act.