Commodity Futures Trading Commission Chair Mike Selig said new crypto rulemaking will help prevent another collapse like FTX, saying the agency’s framework is designed to protect customer funds in digital asset markets.
Speaking Wednesday on Fox Business Network’s Varney & Co., Selig said crypto exchanges would have a path to register with the regulator in order to safeguard spot markets for digital assets.
Selig says the CFTC model would have blocked an FTX-style failure
FTX, once one of the most widely used crypto exchanges, collapsed abruptly in 2022 after mismanagement. Its founder, Sam Bankman-Fried, is now serving a 25-year prison sentence for fraud and other crimes after $8 billion in customer funds was stolen.
The CFTC and other regulators are still moving forward with crypto rulemaking even after lawmakers blocked the long-awaited Clarity Act last month.
Selig said, “Four years ago, we saw the collapse of Sam Bankman-Fried’s FTX, where he stole over $8 billion in customer funds. That can’t happen under our regime.”
He added, “Actually, Sam Bankman-Fried’s subsidiary that was CFTC registered, all the funds were safe and secure because they were segregated, and we have some of the most stringent requirements of any federal agency when it comes to markets — we want to bring that to the crypto world.”
New federal category targets retail leveraged crypto trading
Selig said some exchanges may choose to remain under state regimes, while others may register at the federal level.
The CFTC is relying on powers it already has to regulate crypto markets. This week, the agency asked for public comment on a framework that would create a new federal registration category called a “crypto asset market” for exchanges offering leveraged, margined, or financed crypto trades to retail customers.
Exchanges that do not offer leverage could stay under state licenses. But the agency is interpreting “leverage” broadly, which could place even fully paid trades under CFTC oversight unless customers take delivery of their crypto.
Regulators are preparing for 24/7 on-chain markets
Selig, who previously served as chief counsel at the Securities and Exchange Commission’s Crypto Task Force, said last month that the regulator was preparing for a transition as markets move “24-7, on-chain.”
The report also said both the CFTC and the SEC have taken a friendlier approach to crypto regulation since U.S. President Donald Trump took power.
This article first appeared on Bitcoin Magazine and was written by Mathew Di Salvo.