The new federal framework was proposed by the United States Commodity Futures Trading Commission for crypto exchanges that offer leveraged trading to retail customers. The move could give U.S. crypto platforms a clearer path to federal oversight at a time when the country still lacks a broad crypto market law.
CFTC Chairman Michael S. Selig announced the proposals on October 5 during a speech at the Fordham Law Blockchain Regulatory Symposium in New York. The agency is seeking public input on proposals covering the regulation of crypto asset transactions (CTX) and the regulation of crypto asset markets (CAM).
New Federal Pathway for Leveraged Trading
The framework would be a federal option for crypto exchanges. Platforms would not be automatically forced to adhere to the CFTC system. They could continue to operate under state license if their business model allows it. However, exchanges offering certain types of leveraged crypto trading already fall under CFTC registration requirements under current law.
The CFTC describe the crypto market through a three-tier structure. Ordinary cash exchanges would remain largely subject to state money transmission rules, while the CFTC would continue to have anti-fraud and anti-manipulation powers. Exchanges offering retail margin, leveraged or funded crypto trading would fall into the second category. Platforms offering derivatives such as perpetual contracts would fall into the third category. The new proposals mainly target this second group.
Under the plan, exchanges that only want to offer leveraged crypto trading could register as a new type of derivatives exchange called a crypto asset market (CAM). Existing derivatives exchanges registered with the CFTC could also offer these products under the proposed rules.
The framework would provide several protections for customers. CAMs could face requirements covering market surveillance, financial guarantees as well as client funds. The CFTC is also considering proof of reserves rules for exchanges holding customer assets in omnibus accounts.
Another major element involves forward commission merchants (FCMs). These firms would manage customer accounts and funds and would have to comply with existing customer protection requirements. Their involvement would also integrate anti-money laundering and customer identification rules into the process. The CFTC is also exploring how the rules might work with self-custody. Under the proposal, crypto assets sent to a customer’s external wallet within 28 days could generally meet the agency’s interpretation of “actual delivery.”
“The framework I have outlined is an important step toward integrating crypto asset markets under the protection of the CEA. It will establish clear rules of conduct for businesses that wish to serve U.S. customers, strengthen the integrity of these markets, and pave the way for responsible innovation here in America.”
On chain finance
Selig also highlighted the agency’s broader interest in on-chain finance. He said developers who simply publish software and do not control transactions or hold customer assets should not automatically be treated like traditional intermediaries.
The proposal alone does not create a comprehensive federal crypto regime. Congress will still have to decide whether all exchanges should be required to register federally.
The article CFTC Wants Clearer Rules for Leveraged Cryptocurrency Trading Amid Key US Regulatory Moves appeared first on CryptoPotato.
About the Author
