CFTC Considers Rules for Leveraged Crypto Trading on US Exchanges

The US Commodity Futures Trading Commission (CFTC) is exploring new rules to allow cryptocurrency exchanges to offer leveraged and margin trading to retail customers under a purpose-built federal regulatory framework.

CFTC Chairman Michael Selig highlighted the initiative during the inaugural meeting of its Innovation Advisory Committee in Washington, where crypto executives, traditional exchanges, and financial institutions discussed how US rules should adapt to digital-asset markets.

The effort aims to address one of the largest differences between US and offshore crypto markets. International exchanges commonly allow customers to trade cryptocurrencies using borrowed capital and derivatives with substantial leverage, while regulatory restrictions have left American retail investors with fewer options.

The CFTC is pursuing three potential regulatory routes: clarifying when leveraged transactions can qualify for the Commodity Exchange Act's 'actual delivery' exception, codifying requirements for designated contract markets (DCMs), and creating a new category of DCM registration specifically tailored to retail leveraged trading.