CFTC Prepares Own Crypto Rules in Case CLARITY Fails

The Commodity Futures Trading Commission (CFTC) is preparing to establish its own framework for regulating the cryptocurrency market, in case Congress fails to pass the CLARITY Act.

CFTC Chairman Michael S. Selig announced that his staff has begun exploring rules to codify a CFTC market structure for crypto assets using existing authorities. This would enable registered and unregistered exchanges to be designated as a type of DCM known as a crypto asset market, offering trading on a leveraged or margined basis subject to purpose-fit rules.

Selig also wants his staff to engage with developers of onchain finance protocols to establish ways in which they can offer their protocols in the United States without worrying about legality. He emphasized that CLARITY will still be given time for a congressional vote, but if lawmakers cannot agree, he plans to direct CFTC staff to move swiftly to propose new rules.

The CFTC is also expanding its rulebook to include financial markets built around AI compute and prediction markets. Selig noted that the agency has authority to designate a new type of DCM centered on crypto, which could be joined by current registrants as well as non-registrant exchanges.