CFTC Unveils New Federal Framework for Leveraged Crypto Markets
The Commodity Futures Trading Commission (CFTC) is crafting a new federal framework for crypto exchanges, leveraging existing authorities to regulate leveraged, margined, or financed crypto transactions for retail customers. CFTC Chairman Michael Selig outlined proposals titled Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM) at the Fordham Law Blockchain Regulatory Symposium. These proposals aim to provide a federal pathway for crypto exchanges without waiting for Congress to overhaul U.S. digital asset market structure.
The proposed structure divides crypto trading into three regulatory levels. Pure spot exchanges fall under the first level, with CFTC retaining anti-fraud and anti-manipulation authority but generally operating through state-level licensing. The second level covers retail transactions involving margin, leverage, or financing, targeting these under Section 2(c)(2)(D) of the Commodity Exchange Act. The highest level includes perpetual contracts, futures, and other derivatives, subject to existing CFTC derivatives registration requirements.
A central proposal introduces the Crypto Asset Market (CAM) as a new subcategory of designated contract market. Platforms offering qualifying leveraged retail transactions could register as CAMs, subject to core principles covering market surveillance, financial integrity, customer assets, conflicts of interest, and system safeguards. The CFTC also considers proof-of-reserves requirements for CAMs holding customer property through omnibus accounts and whether futures commission merchants (FCMs) should intermediate CTX transactions.
The proposal clarifies that transferring crypto to an external non-custodial wallet controlled by the customer within 28 days would generally qualify as actual delivery. This creates a clearer boundary between exchange-controlled arrangements and assets in the customer’s possession. The CFTC is also drawing a similar boundary around software developers, stating that a developer who publishes code without soliciting orders, controlling execution, or taking custody of customer assets should not be required to register as an introducing broker.