CFTC Moves Forward With Federal Crypto Trading Rules

The Commodity Futures Trading Commission (CFTC) has initiated the process of creating a federal regulatory framework for certain crypto trading platforms after Congress failed to pass the comprehensive CLARITY Act. On October 5, the agency published an Advanced Notice of Proposed Rulemaking (ANPRM) focusing on leveraged and margined retail crypto transactions under the Commodity Exchange Act. This move aims to develop tailored rules for crypto markets using the CFTC’s existing authority.

The proposal targets leveraged, margined, or financed retail crypto transactions, known as crypto asset transactions (CTXs). The CFTC plans to establish a new regulated platform category called crypto asset markets, allowing qualifying exchanges to opt into federal supervision instead of relying solely on state licenses. The framework would include requirements for market manipulation controls, customer protection, proof of reserves, and regulatory reporting.

The CFTC’s proposal comes in response to the stalled CLARITY Act, which would have expanded the agency’s authority over the spot crypto market. With the bill’s failure, the CFTC is proceeding with rulemaking under its current legal powers. The ANPRM is open for public comment for 60 days, after which the CFTC may issue a formal proposed rule. However, the final rules could face legal challenges due to the lack of explicit legislative authority.