CFTC proposes federal framework to lure offshore crypto trading to US
The Commodity Futures Trading Commission (CFTC) has taken a significant step to attract offshore crypto trading back to the US. On October 5, the agency launched rulemaking for two new regulations, CTX and CAM, aimed at creating a federal framework for platforms offering leveraged or financed crypto trading to retail customers. This move comes as Congress remains gridlocked on broader market-structure legislation, providing a federal route for US crypto exchanges to offer retail leverage.
The proposed framework would establish three regulatory paths for exchanges based on the products they offer. Ordinary spot exchanges could remain under state licensing, while platforms offering leveraged or financed retail crypto transactions could seek federal registration under the new framework. Venues offering derivatives like futures and perpetual contracts would continue under the existing designated contract market regime. The CFTC is relying on existing authority under the Commodity Exchange Act to implement this structure.
The initiative also includes safeguards inspired by the FTX bankruptcy, such as rules governing financial integrity, surveillance, conflicts of interest, and operational safeguards. Exchanges could face additional requirements like proof-of-reserves for omnibus accounts and intermediation through registered futures commission merchants (FCMs). These provisions could raise the cost of opting into the federal framework but may be offset by access to leveraged products that have historically strengthened offshore competitors.
The CFTC is also clarifying the Commodity Exchange Act’s “actual delivery” exception, treating transfers to a customer’s external non-custodial wallet within 28 days as generally satisfying the exemption. The agency is seeking public input before drafting detailed rules, leaving major elements of the framework unresolved, including leverage limits and capital standards. The success of this initiative hinges on whether major US exchanges find the benefits of federal registration valuable enough to accept deeper oversight.