CFTC Proposes New Rules to Attract US Crypto Exchanges with Federal Leverage Oversight
The Commodity Futures Trading Commission (CFTC) is proposing new rules to attract US crypto exchanges back from offshore platforms by offering them federal oversight for retail leverage trading. On October 5, the agency opened rulemaking for Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM), which would create a national framework for platforms offering margined, leveraged, or financed crypto trading. This move comes as Congress remains stalled on comprehensive crypto market-structure legislation.
The framework would provide three regulatory paths for exchanges, depending on the services 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 perpetuals would continue under the existing designated contract market regime.
The CFTC is relying on existing authority under the Commodity Exchange Act to implement these rules, particularly Section 2(c)(2)(D), which covers certain leveraged retail commodity transactions. The proposal aims to narrow the product gap between US exchanges and offshore rivals, which have attracted traders with leveraged trading and perpetual contracts. However, accepting CFTC oversight could force changes to the vertically integrated model many crypto venues use, combining exchange, brokerage, and custody functions.
CFTC Chairman Michael Selig emphasized that the initiative is shaped by lessons from FTX's bankruptcy, aiming to establish preventive safeguards rather than relying solely on enforcement. The proposal includes requirements for financial integrity, surveillance, conflicts of interest, and operational safeguards. It also considers crypto-specific requirements, such as assessing token concentration and distribution methods to prevent manipulation.