CFTC Proposes New Federal Crypto Rules, Admits It Still Can't Touch the Spot Market

Since the Senate let the CLARITY Act die last week, the CFTC has stopped waiting on Congress and started writing its own rules.

On Monday, October 5, the Commodity Futures Trading Commission published an Advanced Notice of Proposed Rulemaking covering two new frameworks: Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM), according to Bloomberg and Decrypt. The filing, numbered RIN 3038-AF80, spans 17 CFR Parts 1, 38, and 39, according to securities.io, which reported the Commission approved it subject to standard pre-publication corrections.

CFTC Chairman Michael Selig unveiled the plan in prepared remarks at Fordham Law School's Blockchain Regulatory Symposium in New York, calling it "a critical step in the CFTC's ongoing efforts to ensure America remains the crypto capital of the world," per securities.io.

What the rule actually does

Under a 2010 Dodd-Frank provision, any retail commodity trade offered with leverage, margin, or financing has to run through a CFTC-registered exchange, same as futures, according to Decrypt. Regulation CTX leans on that authority hard: even routine onboarding paperwork or terms-of-service language offering leverage could pull a trade under federal oversight, Decrypt reported, so long as the crypto sits on the exchange's books rather than in the customer's own wallet.

Trades escape that requirement only through what the agency calls "actual delivery" — and the CFTC is proposing that sending crypto to a customer's own non-custodial wallet within 28 days counts, according to The Defiant and bitbo.io. On-chain trading protocols that route tokens straight to user wallets would typically clear that bar automatically.

Regulation CAM would build a new registration lane called a "crypto asset market," a tailored version of the designated contract market status that regular futures exchanges already hold. Leverage could only come from registered brokers or banks they sponsor, trades would have to flow through anti-money-laundering-regulated futures commission merchants, and the CFTC is weighing proof-of-reserves requirements plus standards against listing tokens prone to manipulation, per Decrypt and bitbo.io.

Crucially, as Crypto Briefing's John Chen reported, this is voluntary. Exchanges that don't offer leverage can keep operating purely under state money-transmitter licenses. Selig said the agency simply lacks the legal authority to force spot platforms to register federally without Congress acting first.

The FTX pitch, and the gap nobody's hiding

Selig leaned on FTX's 2022 collapse as the agency's case for why this matters. The exchange's operators stole more than $8 billion in customer assets, revealed on November 11, 2022, according to securities.io. Property held through FTX's CFTC-registered subsidiary stayed segregated and secure, a point former Chairman Rostin Behnam testified to Congress, and one Selig repeated in his Monday remarks per bitbo.io and Crypto Briefing. His argument: a uniform federal regime built before a crisis beats lawsuits filed after one.

He also took a direct shot at his predecessors, describing the Biden-era CFTC's cases against Kraken, Ooki DAO, and Uniswap as "regulation by enforcement" that pushed legitimate business offshore instead of giving it clear rules, according to Decrypt.

The CFTC still has zero authority over spot markets, meaning the direct buying and selling of Bitcoin, Ether, and most other tokens at current prices without leverage, according to Crypto News and the KuCoin-sourced BlockBeats report. That space stays governed by a patchwork of state regimes, including New York's BitLicense and California's Digital Financial Assets license, plus FinCEN money-services-business registration, per securities.io. The notice itself states those state regimes were built for payments, not markets, and don't include rules to prevent conflicts of interest or manipulation the way federal market structure law does.

A rule that only reaches exchanges offering leverage leaves the much larger universe of ordinary spot trading under the same state-by-state rules that have existed for years, with no federal backstop against fraud beyond the CFTC's existing, narrower anti-manipulation authority. CFTC officials told Crypto News they aren't yet sure how large that remaining spot-market gap is and are counting on the public comment period to help answer that.

What happens next

The ANPRM opens a 60-day public comment window once it posts in the Federal Register, with submissions going to Regulations.gov, according to securities.io. Decrypt reported the framework had already been sent to the White House for review in September, days after the Clarity Act failed in the Senate.

No registration requirement takes effect yet, and the agency has given no timeline for when a formal rulemaking might follow. Selig closed his Fordham remarks telling the industry to "build markets that are open, competitive, and worthy of the public's trust," per bitbo.io. Whether Congress revives anything resembling the CLARITY Act before the CFTC finishes this process on its own remains an open question.