CTFC Proposes Retail Crypto Trading Regulations

The Commodity Futures Trading Commission wants to give retail investors access to leveraged crypto trading under a new federal market structure, as Chair Michael Selig moves to fill the regulatory gap left by the stalled CLARITY Act.

The CTFC’s proposed framework would create a crypto asset market for platforms facilitating leveraged, financed, or margin trades. These platforms could allow retail investors to trade crypto on a margined, leveraged or financed basis—something they can’t currently do on existing spot exchanges.

The CLARITY Act would have required crypto assets to trade on CFTC-registered platforms. But the CTFC does not have the authority to impose that requirement without congressional approval. Under Selig’s plan, crypto exchanges could instead opt to operate under a single federal market-regulatory regime.

The CTFC would also establish proactive compliance safeguards designed to prevent fraudulent schemes before they occur. Selig’s approach is intended to anticipate failures like the collapse of FTX, rather than relying on enforcement after the fact.

Action Still Needed

Even if they come to fruition, the rules fall short of what the CLARITY Act sought to accomplish. And rules developed by the agency without congressional action could face legal challenges, potentially leaving the regulatory framework in limbo.