CFTC Proposes Federal Licensing Framework for Crypto Exchanges
The Commodity Futures Trading Commission (CFTC) has introduced a new federal licensing framework aimed at regulating crypto exchanges and leverage platforms. This proposal, outlined in an advance notice of proposed rulemaking, seeks to establish clearer rules for crypto trading, custody, brokers, and market operators.
The framework includes two key regulations: Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM). These regulations are designed to reduce regulatory fragmentation for compliant crypto businesses. Exchanges offering leverage could fall under federal oversight, while those without leverage may continue operating under state licenses.
Under the proposed rules, exchanges that provide leverage would be subject to federal supervision, even if customers make fully paid crypto purchases. The key exception is 'actual delivery,' which requires customers to control their assets through private keys. Platforms that facilitate direct wallet settlement, such as on-chain protocols, would generally meet this standard.
Regulation CAM would introduce a dedicated 'crypto asset market' license, modeled after the designated contract market structure used by futures venues. Registered platforms could collaborate with futures commission merchants, with leverage provided through brokers or sponsored banks. The CFTC is also considering proof-of-reserves rules and safeguards against token manipulation.