CFTC proposes new federal framework for leveraged retail crypto trading

The Commodity Futures Trading Commission on Monday launched a rulemaking process to establish a federal regulatory framework for leveraged and margined retail crypto trading, including a new registration category for exchanges offering such products.

The agency is considering creating a new “crypto asset market” category of CFTC-registered exchanges that could offer such products under a single federal regulatory regime, through proposed rules called Regulation CTX and Regulation CAM. The proposal would provide an alternative to state-licensed exchanges, but would not require crypto assets to trade on CFTC-registered platforms without congressional action.

"Today's action is a critical step in the CFTC’s ongoing efforts to ensure America remains the crypto capital of the world," CFTC Chairman Michael Selig said in a release. "The American people deserve clarity, certainty, and consumer protections in the crypto asset markets and the agency is committed to delivering this by incorporating crypto asset transactions into its uniform national market regulatory framework."

Regulation CTX and Regulation CAM would establish requirements for CFTC-registered exchanges that offer these crypto assets for trading, Selig wrote in a column for The Wall Street Journal. Unlike the Clarity Act, these regulations wouldn’t require crypto assets to trade on CFTC-registered platforms.

"We don’t have the authority to impose such a requirement without congressional action," he said.

The CFTC and Securities and Exchange Commission have spurred efforts to establish crypto regulations after the Clarity Act failed to pass the Senate last month. For instance, the SEC released its long-awaited innovation exemption while the CFTC  previously filed crypto asset rulemaking with White House.

"Under my leadership, the Commission will take every necessary step to establish regulations that are designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX," Selig said Monday.