The U.S. Commodity Futures Trading Commission is proposing what may become its first detailed compliance map for parts of the crypto market. Commissioner Michael Selig introduced Regulation CTX and the related Reg CAM at an academic symposium at Fordham Law School on Monday, framing the effort as a practical answer to a question the industry has faced for years: what, exactly, does lawful compliance look like under existing commodities rules?
The two proposals are part of a 108-page advance notice of proposed rulemaking, or ANPR. As described in the article, the Dodd-Frank Act of 2010 requires retail commodity transactions involving leverage, margin, or financing to take place on properly registered venues. Over the past decade, the CFTC has enforced that standard against crypto firms, but without laying out a full operating blueprint. Galaxy Research said the ANPR gives the industry a starting point for substantive discussion on margin rules and custody requirements instead of receiving a Wells Notice after submitting comments.
Reg CAM would allow fully integrated crypto venues
In traditional futures markets, core functions are split across separate legal entities. A designated contract market, or DCM, handles order matching, rule enforcement, and market surveillance. A futures commission merchant, or FCM, holds customer funds and keeps them segregated from house assets at approved custodians under National Futures Association oversight. A derivatives clearing organization, or DCO, steps into each matched trade as the common guarantor and maintains enough financial resources to cover the default of its largest member.
Even when one corporate group owns more than one of those businesses, each entity still holds its own license and follows its own rule set. CME Group, cited in the article, operates both exchange and clearing businesses under that model.
Crypto exchanges did not develop that way. The article says that was partly due to the bearer nature of crypto assets and partly due to the long absence of clear regulatory guidance. In practice, many platforms combined listing, matching, clearing, settlement, and custody inside one system, with user balances represented as entries in an internal database.
Reg CAM does not try to force those venues into the traditional fragmented structure. Instead, it would allow qualified crypto asset markets to register as self-clearing FCMs, self-clearing DCOs, or both at once as a “Fully Integrated CAM.” The article says this is the same structural outcome Coinbase pushed for in a public letter to regulators last year.
That model invites obvious comparisons with FTX. The article says the CFTC’s answer is grounded in legal history: after FTX collapsed, customer funds at its CFTC-registered entity remained segregated and safe, in contrast with 130 offshore affiliated entities that entered bankruptcy.
The notice links actual delivery to control of private keys
Galaxy Research argues that the more important breakthrough lies outside the large licensed exchange model. Under existing rules, a commodity transaction can avoid the strict requirement to trade on a licensed venue if “actual delivery” takes place within 28 days. Regulation CTX tries to define what actual delivery means for crypto assets.
The notice says actual delivery may require “actual possession of the ability to use, control, or transfer the entire quantity of the commodity, whether directly or through a depository,” and the article highlights the reference to access credentials such as private keys. In practical terms, that draws a line between an internal bookkeeping transfer at a centralized exchange and a withdrawal to an independent wallet controlled by the user. The former would not count as actual delivery. The latter would.
The CFTC also preliminarily concludes that onchain trading protocols generally deliver assets directly to the buyer’s digital wallet. According to the article, footnote 279 states that once onchain delivery is complete, the agency would no longer exercise day-to-day regulatory jurisdiction over that asset other than in cases involving fraud or market manipulation. Selig echoed the familiar phrase on social media and said, “For those who wish to act in accordance with the original cypherpunk vision, we are committed to providing the certainty needed to let onchain finance grow.”
Galaxy Research says that reading means purely self-custodial onchain interactions, including those resembling Uniswap, would not need CAM, DCM, or FCM registration. The article also points to a rare alignment between the two main U.S. financial regulators. Former SEC Commissioner Hester Peirce previously said peer-to-peer smart contract matching does not require exemptive relief, and the SEC’s latest proposed custody rule would allow advisers to hold private keys themselves in extreme circumstances. In the article’s framing, “not your keys, not your coins” is moving into the federal regulatory mainstream.
Front ends, vault integrations, and leverage definitions remain open questions
Clearer room for self-custodial trading does not mean every related layer escapes scrutiny. The article says user interfaces that trigger trades may still face review.
Regulation CTX is described as taking a broad view of what it means to “provide leverage.” If a centralized platform’s terms of service include leverage, or if the same retail app interface used to buy crypto assets also integrates onchain yield vaults, regulators are asking whether that could amount to offering leverage to retail users. The article cites Coinbase App’s integration of Morpho vaults curated by Steakhouse as an example, saying the compliance treatment of such front ends could shape how far CeDeFi models can develop.
Smart contract testing and proof-of-reserves are also under discussion
On smart contract oversight, the commission is considering whether autonomous contracts that run without human intervention should face mandatory pre-deployment testing, formal verification, and circuit-breaker mechanisms. The article notes that traditional code audits have often produced weak signals, but says formal verification could become a more meaningful compliance threshold as large language model coding tools and fuzzing systems improve.
The CFTC is also exploring whether blockchain-native transparency can be used in reserve oversight. Galaxy recommends an onchain Merkle Tree approach, arguing that live cryptographic proof is stronger than delayed spot checks by accounting firms and could move the market from proof of reserves toward proof of solvency.
Regulated onchain order books are now part of the conversation
The article says Section V.B of the notice asks whether a compliant market should be allowed to use a blockchain network itself as the matching and execution layer. In that scenario, a regulated version of Hyperliquid could come into view: a high-performance order book running fully onchain, with access for U.S. users controlled through front-end KYC gates.
One possible price of entry, according to the article, would be full open-sourcing of the underlying node code.
Selig closed his remarks with a broader statement about the stakes. “Satoshi Nakamoto’s technological revolution has fundamentally changed the global financial system. If the United States can embrace this paradigm shift and build the right rules framework, we will usher in another golden age.”