Congress couldnât get a crypto market structure bill past 60 votes. So the Commodity Futures Trading Commission plans to write its own federal rules for crypto markets, using the authority it already has.
On Sunday, the derivatives regulator released an Advanced Notice of Proposed Rulemaking (ANPRM). It asks for public comment on two regulatory regimes it plans to introduce: Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM).
Donât get ahead of it, though. None of these rules has been enacted.
A comment period, not a rulebook yet
An ANPRM is the opening step in the regulatory process. The CFTC has yet to enact CTX or CAM rules. Right now itâs collecting input from the industry, and that input may eventually shape formal proposed regulations.
Comments will be open for 60 days after the notice is published in the Federal Register. Thatâs the window that matters if you have a stake in how this turns out.
The agency describes the effort as an attempt to set up crypto-specific regulations under its current authority under the Commodity Exchange Act. CFTC Chairman Michael Selig described it in much bigger terms.
âTodayâs action is a critical step in the CFTCâs ongoing efforts to ensure America remains the crypto capital of the world,â Selig said.
Thatâs a lofty line for what is, procedurally, a request for feedback.
Leverage is the target
The CFTCâs immediate concern is retail trading involving margin, leverage or other financing. Conventional spot trading of cryptocurrency isnât the priority for now.
That focus becomes clearer once you look at how Selig divides the market.
Seligâs three-tier map
Selig outlined a market with three tiers. The first covers conventional spot exchanges. Those would generally stay under the status quo of state money transmitter regimes, though the CFTC would still have authority to act against fraud and market manipulation.
The second tier covers exchanges that let retail customers transact cryptocurrency with margin, leverage or financing. The regulator calls these transactions CTXs, and this is where the new rules would apply.
Exchanges that facilitate futures, perpetuals and derivatives make up the third tier. The CFTCâs designated contract market framework already applies to them.
So if you buy coins outright on a spot exchange, the structure as described leaves your situation mostly unchanged. If you trade with borrowed money on a retail platform, youâre in the part of the market where the CFTC is writing new rules.
Why the CFTC is moving now
The move comes just weeks after the Senate failed to pass the Clarity Act, Congressâ most recent attempt at a broad digital asset regime. The bill couldnât clear the 60-vote threshold to proceed. Four Republicans joined Democrats in voting it down.
That legislation would have given the CFTC a wider statutory role over crypto markets. Since it failed, the agency is working within the limits of the law it already has.
If you run a platform that offers leveraged crypto trading to retail customers, file your comments during that 60-day window. Itâs the stage of the process when the CTX rules can still be shaped.
