CFTC Proposes New Rules to Prevent Another FTX-Style Collapse

The Commodity Futures Trading Commission (CFTC) has taken a significant step toward regulating the crypto market with the publication of an Advanced Notice of Proposed Rulemaking (ANPRM) on October 5. The proposal seeks public comments on a federal framework for retail crypto transactions and a new registration category called "crypto asset market." The 60-day comment period follows the Senate's failure to advance the CLARITY Act on September 15, which would have established a federal market-structure framework for crypto.

CFTC Chairman Michael Selig emphasized the importance of the move, stating that the new rules aim to "prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX." The ANPRM explores an "actual delivery" exemption, allowing platforms to send crypto to a user's non-custodial wallet within 28 days to meet delivery requirements. Selig described the new registration category as a voluntary "federal option," noting that only Congress can mandate all crypto exchanges to register with the CFTC.

The ANPRM focuses on three key areas: preventing abusive practices in crypto markets under a uniform national regime, providing clearer guidance on industry best practices, and codifying the "crypto asset market" as a formal subcategory of designated contract market registration. The proposal comes as regulators accelerate efforts in other areas, including stablecoin rewards, exchange rules, and token buybacks, following the CLARITY Act's stall.

Comments on the CFTC's ANPRM are due within 60 days of its publication in the Federal Register and will be posted on Regulations.gov. The regulatory landscape continues to evolve, with the Independent Community Bankers of America recently suing the Office of the Comptroller of the Currency over crypto trust bank charters.