The United States Commodity Futures Trading Commission (CFTC) has taken the first step toward creating a new federal framework for certain crypto trading platforms, moving ahead with rulemaking after Congress failed to pass comprehensive market structure legislation.
On October 5, the agency published an Advanced Notice of Proposed Rulemaking (ANPRM) covering leveraged and margined retail crypto transactions under the Commodity Exchange Act. The CFTC said the process is intended to develop rules specifically tailored to crypto markets using authority it already has under existing law.
The proposal could eventually allow qualifying crypto exchanges to opt into a federal regulatory regime rather than relying only on state-by-state licensing. It would also require market manipulation controls, customer protection and reserves for participating platforms.
The move comes less than a month after the CLARITY Act failed to advance in the Senate, leaving regulators to pursue parts of crypto market structure through their existing statutory powers.
The CFTC Is Starting With Leveraged Retail Crypto Trading
The current rulemaking does not immediately place the entire US spot crypto market under CFTC supervision.
Instead, the ANPRM focuses on retail commodity transactions involving crypto assets, particularly leveraged, margined or financed trades covered by Section 2(c)(2)(D) of the Commodity Exchange Act.
The CFTC refers to these as crypto asset transactions (CTXs).
These transactions already fall within an area where the agency has legal authority, giving the CFTC a clearer basis to begin writing rules without waiting for new legislation from Congress.
| Area | Current CFTC Proposal |
| Main focus | Leveraged, margined and financed retail crypto transactions |
| Legal basis | Commodity Exchange Act Section 2(c)(2)(D) |
| Proposed platform category | Crypto asset markets |
| Federal registration | Voluntary framework for eligible exchanges |
| Customer intermediation | Through registered futures commission merchants |
| Proof of reserves | Expected requirement under proposed framework |
| Anti-manipulation controls | Expected requirement |
| Final rules active? | No |
Table 1. Main Elements of the CFTC Crypto Rulemaking
New “Crypto Asset Markets” Could Operate Under Federal Rules
The CFTC plans to create a new regulated platform category known as crypto asset markets.
Crypto exchanges that meet the eventual requirements could opt into CFTC supervision rather than operating solely under state licensing regimes.
The proposed structure would subject participating platforms to federal standards that could include the following:
- Market manipulation controls
- Proof-of-reserves requirements
- Customer protection rules
- Operational standards
- Regulatory reporting
Registered futures commission merchants (FCMs) would also intermediate customer transactions on these platforms, bringing parts of crypto trading closer to the regulatory structure already used for futures and derivatives markets.
The Rules Could Reduce Reliance on State-by-State Licensing
One practical problem facing US crypto companies is the fragmented, state-by-state licensing system.
A company offering services nationwide may need multiple state licenses while also complying with separate federal rules depending on the activity involved.
The CFTC’s proposal could give eligible platforms another option: operate under a unified federal framework for covered transactions.
That would not automatically replace every state requirement or give the CFTC authority over every type of digital asset activity.
The scope would depend on the final rule and on the limits of the agency’s existing authority.
This distinction matters because the stalled CLARITY Act would have gone further by giving the CFTC broader statutory authority over much of the spot crypto commodity market.
Proof of Reserves Could Become a Federal Requirement
Crypto platforms have increasingly published reserve disclosures voluntarily, particularly following the collapse of centralized exchanges that held insufficient customer assets.
Under a federal framework, reserve requirements could become regulatory obligations for qualifying crypto asset markets rather than a voluntary transparency measure.
The exact methodology has not yet been finalized, as important questions still include:
- Which assets must be included?
- How customer liabilities are calculated?
- Are the reserve data independently verified?
- How frequently would disclosures be updated?
- Should off-chain liabilities also be included?
The ANPRM is designed partly to gather industry feedback on those implementation details.
Leverage Limits Have Not Been Fixed
The CFTC is also considering how leveraged crypto trading should operate under the new framework.
The proposal does not currently establish a universal leverage limit. Instead, individual leverage arrangements would require CFTC clearance, allowing the regulator to evaluate leverage by product or market rather than imposing one number across all platforms.
For context, leverage is a major risk area in crypto because highly leveraged positions can amplify losses and trigger cascading liquidations during volatile markets.
The final rules could therefore become particularly important for exchanges offering perpetual futures or other leveraged products to US retail customers.
The CFTC Is Moving Without the CLARITY Act
Congress spent months negotiating the CLARITY Act, which would have established a broader federal crypto market structure and formally expanded the CFTC’s authority over spot digital commodity trading.
The Senate failed to advance the legislation in September after a 49-50 procedural vote.
With the bill stalled, the CFTC is now using the authority it already has under the Commodity Exchange Act.
Chairman Michael Selig said the agency believes the CFTC and Securities and Exchange Commission (SEC) already possess enough statutory authority to begin creating parts of a federal crypto regulatory structure even without new legislation.
That does not mean regulators can recreate the entire CLARITY Act through rulemaking.
Congress can grant powers that agencies cannot create for themselves.
The current proposal therefore focuses on areas where the CFTC believes its existing legal authority is strongest.
SEC and CFTC Are Both Advancing Crypto Rules
The SEC has also continued developing digital asset rules while Congress remains divided over broader legislation.
Recent SEC initiatives have addressed areas including tokenized securities and crypto asset offerings, while the CFTC has been developing rules for markets moving toward 24-hour, blockchain-based trading.
Congress may eventually pass legislation defining the long-term division of responsibilities between the two agencies, but in the meantime both regulators are advancing rulemaking under their current powers.
For crypto companies, that means the regulatory environment can continue changing even while the CLARITY Act remains stalled.
The Rules Could Still Face Legal Challenges
The main limitation of agency-led regulation is durability. Companies or industry groups can challenge CFTC rules in federal court if they argue the agency exceeded the authority Congress granted.
A future administration could also revise or reverse parts of the framework through another rulemaking process.
The absence of explicit new legislation creates uncertainty around how stable the framework would remain over time.
The Current Proposal Is Not Yet a Final Rule
The October 5 announcement begins the rulemaking process.
The ANPRM will remain open for public comment for 60 days after publication in the Federal Register.
After reviewing those responses, the CFTC can decide whether to issue a formal proposed rule.
That formal proposal would normally receive another public comment period before the agency could adopt a final rule.
| Rulemaking Stage | Status |
| Advanced Notice of Proposed Rulemaking | Published October 5 |
| Initial public comment period | 60 days after Federal Register publication |
| Formal proposed rule | Not yet issued |
| Second comment period | Expected if formal rule is proposed |
| Final rule | Not yet adopted |
| Compliance date | Not established |
Table 2. CFTC Crypto Rulemaking Process
The final framework could therefore change substantially from the concepts being discussed today.
What Comes Next
The next step is the public comment process, where exchanges, banks, investors, lawyers and other market participants can respond to the CFTC’s proposal.
The agency will then decide which requirements should move into a formal proposed rule.
The bigger question is whether Congress eventually revives market structure legislation or leaves regulators to continue building the framework through their existing authority.
What this means for you: Nothing changes immediately for crypto traders because these rules are not yet final. But if the framework moves forward, US-based exchanges offering leveraged crypto trading products could gain a clearer route to federal regulation while facing stricter requirements around reserves, market integrity and customer protection.
