CFTC Prepares Own Crypto Rules Amid CLARITY Act Uncertainty
The Commodity Futures Trading Commission (CFTC) is preparing to establish its own crypto market rules in case Congress fails to pass the CLARITY Act. CFTC Chairman Michael S. Selig announced that his staff has started exploring rules to codify a CFTC market structure for crypto assets using existing authorities.
The proposed framework would allow registered companies and currently unregistered crypto exchanges to join as designated contract markets (DCMs), with specific regulations designed for margined and leveraged cryptocurrency trades. Selig is also working with SEC Chairman Paul Atkins on an asset classification system through Project Crypto.
The CFTC already has authority to designate a new type of DCM centered on crypto, which would enable current registrants as well as non-registrant exchanges to be designated as a type of DCM known as a crypto asset market. This would allow these entities to offer crypto asset trading on a leveraged or margined basis subject to purpose-fit rules under the CFTC's regulatory oversight.
Selig emphasized that CLARITY will still be given time for a congressional vote, but if lawmakers fail to agree, he plans to direct his staff to begin the CFTC rulemaking process. He compared this approach to the CFTC's history of establishing federal frameworks in response to emerging markets.