The U.S. Commodity Futures Trading Commission on Monday published an advance notice of proposed rulemaking for two crypto frameworks: Regulation Crypto Asset Transactions, or Regulation CTX, and Regulation Crypto Asset Markets, or Regulation CAM. The public will have 60 days to submit comments once the notice is published in the Federal Register.
The proposals apply to retail crypto trades conducted on a margined, leveraged, or financed basis. Under the Commodity Exchange Act, those transactions are already required to be executed through CFTC-registered exchanges. The package does not extend to ordinary spot purchases and sales 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 path for a middle tier of crypto venues
In prepared remarks for Fordham Law’s Blockchain Regulatory Symposium in New York, Selig divided crypto trading venues into three tiers.
At the first tier are plain spot exchanges. Those venues answer to the CFTC on fraud and manipulation, but otherwise generally fall under state money transmission laws.
The second tier covers venues that add margined or leveraged retail trading. Platforms offering perpetual futures and other derivatives also must register with the agency. Selig said the new proposals are aimed at that middle layer.
Under the framework, designated contract markets, or DCMs, could offer those trades under tailored rules. New entrants could register either as full DCMs or under a narrower subcategory called a crypto asset market, or CAM.
"I want to underscore that this is a federal option for crypto asset exchanges," Selig said.
Proof-of-reserves, AML obligations, and token listing reviews
Among the requirements under consideration is a proof-of-reserves obligation for exchanges that pool customer assets in omnibus accounts. The CFTC is also considering mandatory intermediation by futures commission merchants, or FCMs, a structure that would bring Bank Secrecy Act anti-money laundering rules into play.
The proposals also contemplate listing reviews that would examine token concentration, lock-ups, and vesting schedules.
Moving a crypto asset to a user’s own non-custodial wallet within 28 days would generally qualify as actual delivery, which would keep those trades outside the exchange-trading requirement.
Software developers are outside this proposal
Selig also said the CFTC is exploring a separate policy, outside the scope of these proposals, for developers who publish software without taking orders or holding customer assets.
"A person should not have to register as an introducing broker simply because that person shipped code," he said.
Rulemaking moves ahead after the Clarity Act stalled
The proposals arrived after the Clarity Act stalled in a Senate procedural vote on Sept. 15. Two days later, the CFTC sent the rulemaking package to the White House for review.
In a Wall Street Journal op-ed, Selig wrote that, unlike the bill, the CFTC’s rules would not force crypto trading onto CFTC-registered platforms.
"We don’t have the authority to impose such a requirement without congressional action," he wrote.
Selig added: "We haven’t solved every problem, nor can agency action substitute indefinitely for a statutory framework passed by Congress, but we must do what we can."