CFTC and SEC Craft Separate Crypto Rulebooks in Regulatory Push

The US Commodity Futures Trading Commission (CFTC) has taken a major step toward regulating crypto exchanges that offer leverage. On 5 October, the agency published an advance notice of proposed rulemaking outlining two frameworks: Regulation CTX and Regulation CAM. These would bring crypto exchanges under federal oversight, but the notice is just the first phase, seeking public input before formal rules are drafted. Once published in the Federal Register, the public will have 60 days to comment.

The CFTC’s move comes as the Securities and Exchange Commission (SEC) works on its own crypto rulemaking, creating a situation where two federal agencies are developing parallel crypto rulebooks without a clear plan for how they will interact. The CFTC’s plan is based on a 2010 Dodd-Frank provision, requiring retail commodity trades with leverage to take place on a CFTC-registered exchange. Regulation CAM would introduce a “crypto asset market” licence, similar to the status held by futures exchanges.

Jurisdictional conflicts could arise over leverage. Under Regulation CTX, even routine onboarding documents or terms of service that offer leverage could bring fully paid trades under federal oversight if the crypto remains on the exchange’s books. The CFTC suggests that “actual delivery”, possibly requiring customers to hold their private keys, could exempt trades from oversight. Meanwhile, the SEC’s Regulation Crypto Assets proposal could classify the same tokens on the same venues as securities, further complicating the regulatory landscape.

CFTC Chairman Michael Selig emphasized that the rules aim to prevent fraudulent schemes like FTX, marking a shift from the agency’s past approach of “regulation by enforcement.” The framework was sent to the White House for review in September, following the failure of the Clarity Act in the Senate. Exchanges without leverage offerings could continue operating under state money transmitter licences.