- The CFTC published an advance notice outlining Regulation CTX and Regulation CAM, which would let crypto exchanges register as a new type of federally regulated “crypto asset market.”
- Under the agency’s preliminary reading, merely offering leverage could bring even fully paid trades under CFTC oversight unless customers take actual delivery of their crypto.
- The public has 60 days to comment. Exchanges that don’t offer leverage could keep operating under state licenses.
The CFTC wants to give crypto exchanges a federal home, and leverage is the key that unlocks the door. The agency published an advance notice of proposed rulemaking Monday, an early step seeking public input before formal rules are drafted.
The proposal follows the collapse of the Clarity Act, legislation that would have established ground rules for most cryptocurrency activity in the United States but fell short last month. Two linked frameworks are outlined: Regulation Crypto Asset Transactions, or Regulation CTX, and Regulation Crypto Asset Markets, or Regulation CAM.
The plan rests on a 2010 Dodd-Frank provision requiring retail commodity trades offered with leverage to occur on a CFTC-registered exchange. Merely offering leverage through onboarding documents could pull fully paid trades under federal oversight unless the purchased crypto sits in the customer’s own wallet.
Those trades escape oversight only through “actual delivery,” which the CFTC suggests could require customers to hold their private keys. On-chain trading protocols would typically clear that bar.
Regulation CAM would create a “crypto asset market” license, a tailored version of designated contract market status held by futures exchanges. Trades would run through futures commission merchants subject to anti-money laundering rules.
The CFTC is weighing proof-of-reserves requirements and standards against listing tokens prone to manipulation. Chairman Michael Selig said the rules are “designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX.”
The notice repudiates the agency’s past approach, describing its Biden-era cases against Kraken, Ooki DAO, and Uniswap as “regulation by enforcement.” The CFTC sent the framework to the White House for review in September, days after the Clarity Act failed in the Senate.
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