CFTC Proposes First Crypto Market Rules as Congress Stalls on CLARITY
The Commodity Futures Trading Commission has proposed its first crypto market rules, introducing CTX and CAM frameworks to regulate leveraged retail trading and crypto exchanges following the stall of the CLARITY Act.
The Commodity Futures Trading Commission (CFTC) issued a press release detailing its plans to establish clear regulations for the cryptocurrency sector. The agency introduced its initial proposed market rules following the Senate’s failure to pass the CLARITY Act in September.
Alongside the press release, Chairman Michael Selig released a video via his X account to announce the proposed regulations for U.S. crypto markets. In an accompanying statement, Selig noted that although Congress evaluated legislation to clarify the federal legal treatment of crypto, no bill ultimately reached the president’s desk. He argued that the CFTC maintains the existing statutory authority to establish a federal crypto market structure and plans to exercise it.
He added that these new rules are designed to “prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX.”
CTX and CAM Would Put Crypto Exchanges Under One Federal Regime
The measures were released as an advance notice of proposed rulemaking, representing an early phase where the agency presents its strategy and solicits public input. The notice outlines two distinct rules.
The first, Regulation Crypto Asset Transactions (CTX), establishes which crypto trades fall under the CFTC’s jurisdiction, focusing primarily on transactions where retail customers borrow funds or utilize margin to purchase digital assets. While a 2010 law mandates that these leveraged trades occur on federally regulated exchanges, specific operating rules for crypto were never defined.
The second, Regulation Crypto Asset Markets (CAM), proposes a new CFTC license category tailored specifically for exchanges facilitating those transactions.
At present, most U.S. crypto platforms function under state licenses intended for payment processors and money transfer services, with some states imposing dedicated crypto permits like New York’s BitLicense. The CFTC contends these frameworks were built for moving funds rather than overseeing markets, rendering them ineffective against price manipulation or conflicts of interest. Selig highlighted the example of FTX, noting that while its offshore and state-licensed entities went bankrupt, customer assets managed by its CFTC-registered division remained secure.
Retail Margin Trading Gets a Federal Rulebook
Leveraged crypto trading for retail users is not entirely new to regulated U.S. exchanges, which first listed these products in December 2025. However, a definitive rulebook has been lacking, and the notice acknowledges that compliance uncertainties previously hindered efforts to transition these trades to federally regulated platforms.
Standard spot trading—where customers purchase crypto directly without borrowing—is excluded from the framework, meaning exchanges dealing exclusively in spot transactions will not be required to participate.
Regarding asset classification, the SEC and CFTC previously issued a joint determination on March 17 identifying Bitcoin, Ether, Solana, XRP, Stellar, and Tezos, among others, as digital commodities rather than securities. The SEC subsequently released a proposal on August 18 outlining the conditions under which tokens may trade freely outside the scope of securities laws.
Agency Rules Only Go So Far
Selig stated that this announcement marks the beginning of the agency’s rulemaking proceedings, though this approach has inherent limitations. Law firm Orrick observes that agency-level rulemaking cannot achieve the broad state-law preemption that the CLARITY Act sought to establish, while AMINA Bank notes that future commissions retain the ability to rescind rules created solely at the agency level.
The public comment period will remain open for 60 days following publication in the Federal Register. Should the CFTC proceed past that stage, it must still release formal proposed rules followed by final regulations, meaning exchanges are not subject to immediate binding requirements. Meanwhile, the House of Representatives is not scheduled to reconvene until after the November midterms.
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