CFTC Moves to Regulate Leveraged Crypto Trading Amid Stalled Legislation
The Commodity Futures Trading Commission (CFTC) has taken a significant step toward regulating leveraged crypto trading by seeking public input on a potential federal framework. This move follows the failure of a crypto market structure bill in the Senate last month. The CFTC proposed two complementary frameworks: Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM), aimed at establishing rules for leveraged crypto transactions and the exchanges offering them.
CFTC Chair Michael Selig emphasized that this action is just the beginning of addressing gaps in crypto-asset market structure. He noted that while the agency lacks the authority to mandate crypto assets trade on CFTC-registered platforms, the proposed frameworks would allow crypto exchanges to operate under a federal regulatory regime instead of navigating varied state-level requirements. Selig also highlighted that the notice is part of a broader effort to create clear rules for innovators and market participants.
The CFTC is seeking public comment from crypto firms to better understand industry practices and how existing regulatory requirements apply to crypto asset transactions. Stakeholders will have 60 days to submit comments after the advanced notice of proposed rulemaking is published in the Federal Register. Selig acknowledged that agency action cannot substitute for a statutory framework passed by Congress but stressed the need to proceed with what can be done.
With the CLARITY Act stalled, both the CFTC and the Securities and Exchange Commission (SEC) have stated they will pursue their own rules to clarify responsibilities and create clearer registration pathways for exchanges. The SEC has also begun taking steps, including issuing an order in September allowing certain tokenized U.S. stocks to be traded on blockchain-based platforms under a temporary, limited regulatory framework.