The Commodity Futures Trading Commission has released an advance notice of proposed rulemaking to establish federal oversight for cryptocurrency exchanges. This initiative follows the failure of the Clarity Act in the Senate last month. The agency is now seeking public feedback on two frameworks, Regulation CTX and Regulation CAM, over a 60-day period.
The proposal leverages a 2010 Dodd-Frank provision, which mandates that retail commodity trades involving leverage, margin, or financing must occur on CFTC-registered platforms. The agency suggests that actual delivery of assets, potentially requiring customers to hold their own private keys, is necessary to avoid federal oversight. On-chain trading protocols may meet this requirement.
Regulation CAM introduces a specific license for crypto asset markets, mirroring the status of futures exchanges. Under these rules, trades would be processed through registered brokers subject to anti-money laundering standards. Exchanges may also opt to register as their own clearinghouses. The CFTC is considering requirements for proof-of-reserves and token listing standards.
Chairman Michael Selig stated that these rules aim to prevent fraudulent activities rather than relying on enforcement actions. The framework, which was submitted to the White House in September, marks a shift away from the agency's previous approach of regulation by enforcement, seen in cases involving Kraken, Ooki DAO, and Uniswap. The SEC is also developing its own regulatory proposals.
