The Commodity Futures Trading Commission has issued an advance notice of proposed rulemaking outlining a new federal framework for retail crypto asset transactions involving margin, leverage, or financing.
The initiative is titled Regulation Crypto Asset Transactions, known as Regulation CTX, and Regulation Crypto Asset Markets, known as Regulation CAM.
Together, the proposals would establish a new category of CFTC-regulated trading venue and tailor existing regulatory requirements specifically to crypto markets.
The framework builds on Section 2(c)(2)(D) of the Commodity Exchange Act, which generally requires leveraged, margined, or financed retail commodity transactions to occur on registered exchanges unless an exception applies.
Although the CFTC has enforced this requirement against crypto platforms for years, it has not previously established a regulatory structure designed specifically for these transactions.
Chairman Selig described the underlying framework, in remarks delivered the same day, as a three-rung ladder covering ordinary spot trading, leveraged transactions, and trading in perpetual contracts and other derivatives.
The advance notice of proposed rulemaking focuses on what it calls the second rung, addressing crypto asset transactions conducted on a margined, leveraged, or financed basis, referred to as CTXs.
Under the proposed structure, spot-only platforms would be permitted to continue operating under applicable state licensing regimes without triggering CFTC registration obligations.
The proposal would establish Crypto Asset Markets as a subcategory of designated contract markets, subject to tailored requirements under the Commodity Exchange Act’s existing core principles.
The CFTC is not asserting new jurisdiction through this rulemaking but is instead formalising a legal theory the agency has pursued through enforcement actions for a number of years.
Past enforcement actions against Kraken and Ooki DAO have already demonstrated that leveraged retail crypto trading is legally required to occur on a registered exchange under existing law.
Designated contract market registration, core-principle listing standards, and futures commission merchant intermediation already apply to digital asset commodities, but the Commission had not previously adapted them to crypto market specifics.
The CAM framework is designed to address that long-standing regulatory gap by creating a tailored set of requirements suited to the characteristics of crypto trading venues.
Section 2(c)(2)(D) of the Commodity Exchange Act, added in 2010, has long required retail commodity transactions involving margin, leverage, or financing to trade on designated contract markets unless an exception applies.
The advance notice of proposed rulemaking is expected to invite public comment on open questions related to CAM registration requirements, intermediary obligations, and further details of the proposed framework.