CFTC Proposes New Rules for Crypto Markets After Congressional Setback

The Commodity Futures Trading Commission (CFTC) is taking steps to create a new regulatory framework for crypto markets. This move follows Congress' inability to pass comprehensive crypto legislation. The CFTC has issued an Advanced Notice of Proposed Rulemaking (ANPRM) outlining two proposed regulations: Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM). The public has 60 days to comment after the notice is published in the Federal Register.

CFTC Chairman Michael Selig emphasized the importance of this initiative, stating that it is a critical step in ensuring America remains a leader in the crypto space. However, the proposed rules are still in the early stages, and the CFTC is seeking industry feedback to shape the formal regulations.

The CFTC's immediate focus is on retail trading involving margin, leverage, or other financing, rather than conventional spot trading. Selig envisions a three-tier market structure. The first tier includes conventional spot exchanges, which will continue to operate under existing state money transmitter regimes. The second tier encompasses exchanges offering leveraged trading, which will be subject to new rules. The third tier includes exchanges facilitating futures, perpetuals, and derivatives, already regulated under the CFTC's designated contract market framework.

The CFTC's action comes after the Senate failed to pass the Clarity Act, a bill that would have expanded the CFTC's statutory role over crypto markets. The legislation did not receive the necessary 60 votes to proceed, with four Republicans joining Democrats in voting it down.