Crypto05 October, 20262 min read
CFTC Proposes Federal Crypto Framework For Leveraged Trading, Chairman Michael Selig Says
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CFTC proposes two rules to regulate leveraged, margined, or financed crypto trading. Rules apply to registered exchanges offering leveraged trading under existing authorities.
6 outlets told this the same way.
CFTC and SEC propose rules
The U.S. Commodity Futures Trading Commission proposed on Monday a new federal framework for cryptocurrency exchanges that offer leveraged digital asset trading, seeking to bring parts of the spot crypto market under federal oversight after Congress failed to advance comprehensive crypto regulation.
The CFTC said the proposed rules would effectively allow US crypto exchanges to opt into a federal regulatory framework instead of relying primarily on a patchwork of state money-transmitter licenses.
The CFTC Chairman Michael Selig said, "We are giving them an answer," in a speech on Monday at an event in New York held by Fordham University's law school.
The CFTC also said it would establish a new category of CFTC-regulated trading venues called a "crypto asset market" for exchanges that offer leveraged or margined trading to retail customers.
Spot gap and public comment
The CFTC’s proposals would not replace the states’ money-transmission regulations for direct trading, and the CFTC said its efforts otherwise cannot touch or replace the governing rules of direct trading. The CFTC’s new efforts would leave a significant gap because the regulator lacks authority to oversee spot markets, which include the direct trading of crypto where the assets change hands in their original form at current market prices.
The CFTC said the proposals are opening up a 60-day public comment period, and the officials said they were not yet sure what the scale of the remaining spot market will be until they hear more from the industry. The CFTC Chairman Michael Selig said, "Today, the CFTC is doing its part to deliver clear rules of the road for crypto asset markets" in remarks prepared for delivery at Fordham Law's annual Blockchain Regulatory Symposium.
Requirements, enforcement, and stakes
The CFTC said the crypto asset market platforms would be subject to specific requirements including anti-market-manipulation controls and a "proof of reserves" obligation. The CFTC proposed that registered futures commission merchants intermediate customer trades on the new category of exchanges, while the agency said it was not stipulating specific leverage limits.
The CFTC said any exchange offering a leveraged transaction would have to clear that product with CFTC staff, and the agency said it would be using its powers to regulate leveraged and margin-dependent trades. The CFTC Chairman Michael Selig said, "These rules would codify a pathway for crypto-asset exchanges to operate under uniform national oversight by the CFTC" and the Reuters report said the proposals come after Congress failed to advance the Clarity Act.