CFTC Seeks Comment on First Crypto Rules for Leveraged Trading, Leaving Spot Markets Out

The Commodity Futures Trading Commission (CFTC) on Monday published an advance notice of proposed rulemaking for two crypto rules, Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM). The public has 60 days to comment once the notice appears in the Federal Register.

The proposals apply to retail crypto trades done on a margined, leveraged or financed basis, which the Commodity Exchange Act already requires to run through CFTC-registered exchanges. They do not reach ordinary spot buying and selling of tokens such as bitcoin and ether.

"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.

A Federal Option

In prepared remarks for Fordham Law's Blockchain Regulatory Symposium in New York, Selig sorted crypto venues into three tiers. Plain spot exchanges answer to the CFTC on fraud and manipulation but otherwise generally fall under state money transmission laws. Venues adding margined or leveraged retail trading must register with the agency, as must those offering perpetual futures and other derivatives.

The proposals target that middle tier. Designated contract markets (DCMs) could offer these trades under tailored rules, while new entrants could register as a full DCM or as a narrower subcategory called a crypto asset market, or CAM.