The CFTC has published an advance notice proposing two new frameworks, Regulation CTX and Regulation CAM, that would let crypto exchanges register as a federally regulated "crypto asset market." Under the agency's preliminary reading, offering leverage — even through standard onboarding terms — could pull fully paid trades under federal oversight unless customers take actual delivery of their crypto. The public has 60 days to comment once the notice reaches the Federal Register.
Leverage becomes the trigger for federal oversight
The CFTC is moving on its own after the Clarity Act, the market-structure bill meant to set rules for most crypto activity in the United States, failed in the Senate last week in a 49-50 procedural vote. Its new proposal rests on a 2010 Dodd-Frank provision that requires retail commodity trades offered with leverage, margin, or financing to run through a CFTC-registered exchange, as if they were futures.
Under Regulation CTX, the agency reads that provision broadly. Simply offering leverage, even through routine onboarding documents or terms of service, could bring fully paid trades under its watch, as long as the purchased crypto stays on the exchange's internal books rather than the customer's own wallet. Trades escape that oversight only through "actual delivery," which the CFTC suggests could require customers to hold their private keys. On-chain trading protocols, which typically send tokens straight to users' wallets, would usually clear that bar, the agency said. Exchanges that don't offer leverage could keep operating under state money transmitter licenses instead.
A licensed path for exchanges
Regulation CAM would create a "crypto asset market" license, modeled on the designated contract market status held by futures exchanges. Trades would run through futures commission merchants and brokers bound by anti-money-laundering rules, and leverage could come only from those brokers or banks they sponsor, though exchanges could also register as their own broker and clearinghouse. The agency is weighing proof-of-reserves requirements and standards against listing tokens prone to manipulation.
CFTC Chairman Michael Selig said the rules are "designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX." The notice also breaks from 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, and Selig had said in August that the agency would write its own crypto rules if Congress came up short. The SEC has moved on a parallel track, proposing Regulation Crypto Assets in August and unveiling an innovation exemption for tokenized stocks last month.
Source: Decrypt
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