New CFTC Crypto Rule Takes Lessons From the $8 Billion FTX Fraud

The Commodity Futures Trading Commission (CFTC) opened public comment on Monday for new crypto trading rules that exchanges could choose to join. Chairman Michael Selig cited FTX, whose founders misappropriated about $8 billion in customer funds.

The CFTC regulates futures and other bets on commodity prices. Yet the one FTX unit it oversaw kept customer money safe, while about 130 sister companies went bankrupt.

What the CFTC Wants to Regulate in Crypto Trading

The notice is an early step that asks for public feedback before any rule is written. It covers retail crypto trades made with borrowed money or platform financing.

Federal law already requires such deals to run on a CFTC-regulated exchange. The agency now wants crypto-specific rules, including a new exchange category called a "crypto asset market."

"Under my leadership, the Commission will take every necessary step to establish regulations that are designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX," Selig wrote.

Selig's announcement revisited an old CNBC coverage of FTX's $32 billion valuation.

What Exchanges Gain and Give Up by Signing Up

In a Wall Street Journal op-ed, Selig said the rules would not force crypto onto CFTC platforms. The agency lacks that power without Congress, where the stalled CLARITY Act failed in the Senate.