CFTC Proposes Rules for Leveraged Retail Crypto Trading
The CFTC has begun rulemaking for federal oversight of leveraged and margined crypto trading by retail customers, with two proposed frameworks for registered exchanges.
The Commodity Futures Trading Commission has started a rulemaking process for federal oversight of leveraged and margined cryptocurrency trading by retail customers. The proposal would establish two regulatory frameworks, Regulation CTX and Regulation CAM, for CFTC-registered exchanges offering eligible crypto products.
The frameworks would set requirements for exchanges that provide higher-risk trading products to individual customers. The agency also proposed a registration category called a crypto asset market, which could give exchanges an alternative to operating mainly under state-issued licenses.
The proposal would not create an exclusive federal marketplace for cryptocurrency trading. The CFTC would need additional authority from Congress before requiring crypto trading to occur on platforms regulated by the agency.
The CFTC opened the process on Oct. 5, after the Clarity Act failed to advance in the Senate in September. The legislation sought to establish a broader framework for digital-asset market regulation. Its failure has left federal agencies pursuing cryptocurrency rules within their existing authority.
The proposal includes requirements intended to protect retail customers from deceptive practices in crypto markets. It would establish rules before misconduct or market losses occur, rather than relying solely on enforcement after an incident.
The process follows the Securities and Exchange Commission’s adoption of its Innovation exemption. The CFTC is also working on other cryptocurrency-related rules. Its rulemaking will determine how the proposed exchange frameworks and crypto asset market registration category could operate under existing federal authority.
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