CFTC Chair Selig Introduces New Crypto Exchange Rules

Commodity Futures Trading Commission (CFTC) Chairman Michael Selig outlined new federal regulations for crypto exchanges during a speech at Fordham Law’s Blockchain Regulatory Symposium in New York on October 5. Selig traced the origins of the industry back to Satoshi Nakamoto’s 2008 white paper, calling it the “big-bang” of decentralized networks, applications, and assets. He highlighted Bitcoin’s decentralized nature, emphasizing that no single entity controls it and it lacks a central point of failure.

Selig criticized the current approach of the Biden-era CFTC and SEC, which he argued relies too heavily on lawsuits rather than clear rules. He noted that this trend intensified after the collapse of FTX, where operators stole over $8 billion in customer assets. However, he pointed out that assets held by FTX’s CFTC-registered subsidiaries remained segregated and secure. In March, the CFTC and SEC issued a joint interpretation categorizing crypto assets, with Bitcoin classified as a digital commodity rather than a security.

With Congress failing to pass the Clarity Act, the CFTC introduced an advance notice of proposed rulemaking for Regulation CTX and Regulation CAM. These rules target exchanges offering margined, leveraged, or financed crypto trades and would create a new registration category called a “crypto asset market.” Proposed safeguards include proof-of-reserves requirements and mandatory intermediation by futures commission merchants. The agency also proposed that delivering crypto to a user’s non-custodial wallet within 28 days counts as “actual delivery,” exempting self-custody trades from on-exchange requirements.

Closing his remarks, Selig encouraged builders to “create markets that are open, competitive, and worthy of the public’s trust.”