U.S. CFTC Unveils Proposed Crypto Rules Focused on Leverage and Margin Trading

The U.S. Commodity Futures Trading Commission (CFTC) on Monday proposed two rules it says would lay the groundwork for a U.S. regulatory framework for cryptocurrencies by using its existing authority over leveraged and margin-based activity, as Congress has yet to finalize comprehensive crypto legislation. According to the proposal, the CFTC is pursuing two tracks meant to form a "comprehensive regulatory framework." One, dubbed Regulation CTX (Regulation of Crypto Asset Trading), targets trading activity directly. The other, Regulation CAM (Regulation of Crypto Asset Markets), would regulate the entities that facilitate those transactions and introduce a new platform category called "Crypto Asset Markets" (CAMs). Under the draft rules, crypto transactions involving leverage, margin, or financing would fall under CFTC oversight. That would capture activity where traders use borrowed funds to increase exposure. CFTC Chair Mike Selig said in prepared remarks for the annual Blockchain Regulation Symposium at Fordham Law School that the proposal "codif[ies] a path for crypto asset trading platforms to operate under the CFTC's unified national regulatory regime," using the same statutory authorities the previous administration relied on for enforcement. The initiative still leaves key areas outside the agency's reach. The CFTC does not have broad authority over spot markets where cryptocurrencies are bought and sold for immediate delivery at prevailing prices without leverage or margin, including direct trading in major tokens such as Bitcoin and Ethereum. The agency does retain enforcement power to police fraud and manipulation in those spot markets. The CFTC also said the proposals do not displace state-level money transmission rules that govern direct trading. Officials indicated that firms offering more complex products would likely do so through tailored platforms overseen by the CFTC. The agency plans to gather industry feedback during a 60-day public comment period. Officials said they still do not have a clear picture of how large the remaining spot market is, while suggesting consumers may prefer transacting in a federally regulated setting. (Source: BlockBeats; reported by ME News)