CFTC Proposes New Crypto Rules After Congress Legislative Setback

The Commodity Futures Trading Commission (CFTC) is preparing to create new federal regulations for crypto markets, following Congress' inability to pass comprehensive crypto legislation. The CFTC released an Advanced Notice of Proposed Rulemaking (ANPRM) on Sunday, seeking public comments on two proposed frameworks: Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM). This initiative is part of the CFTC's broader effort to establish crypto-specific regulations under the Commodity Exchange Act.

CFTC Chairman Michael Selig described the move as a critical step in maintaining America's position as the global leader in crypto. However, this is just the beginning of the regulatory process. The CFTC has not yet enacted the CTX and CAM rules and is inviting industry feedback, with comments open for 60 days after the notice is published in the Federal Register.

The CFTC's immediate focus is on retail trading involving margin, leverage, or financing, rather than conventional spot trading. Selig outlined a three-tier market structure. The first tier includes standard spot exchanges, which will largely remain under state money transmitter regimes but still subject to CFTC oversight for fraud and market manipulation. The second tier covers exchanges offering leveraged crypto trading, which will be subject to new CTX rules. The third tier includes exchanges facilitating futures, perpetuals, and derivatives, which already fall under the CFTC's designated contract market framework.

This regulatory push comes after the Senate failed to pass the Clarity Act, a bill aimed at creating a comprehensive digital asset regime. The legislation did not receive the required 60 votes to proceed, with four Republicans joining Democrats in voting it down. The Clarity Act would have expanded the CFTC's statutory role over crypto markets.