The legislation is dead, but regulators aren’t sitting idle. The CFTC is laying down separate rules for U.S. retail crypto trading.
First, the backstory: On September 15, the Senate failed to end debate (49 to 50), effectively sinking the CLARITY Act. The Senate won’t return until November 9, and the 119th Congress is nearing its end, so the bill will have to start from scratch next year. For now, the legislative path is blocked.
So regulators are taking matters into their own hands. On October 5, the CFTC issued an advance notice of proposed rulemaking (ANPRM), seeking public comment on a plan to use its existing authority under Section 2(c)(2)(D) of the Commodity Exchange Act to create a tailored federal regulatory framework for retail crypto-asset transactions (CTXs) involving leverage, margin, or financing. The public comment period closes on December 14.
The proposed framework has two parts: Reg CTX, which would clarify which transactions fall under the CFTC’s jurisdiction; and Reg CAM, which would establish a “customized” DCM license category for exchanges that only handle CTXs.
The most intriguing point: The CFTC’s preliminary position is that even if a retail customer declines leverage and pays in full for their crypto, the transaction could still fall under its jurisdiction if the merchant had offered a leveraged option. “Paying in full still counts”—that’s a very broad interpretation.
Chairman Michael Selig said the goal is to ensure that “the United States remains the world’s crypto capital,” and to “prevent the next FTX before it happens, rather than prosecute it afterward.” He also stressed that not all crypto assets will be required to trade on CFTC-registered platforms.
Meanwhile, the SEC is also moving ahead with its own “Regulation Crypto Assets.” In this legislative vacuum, both agencies are competing for territory with “rules plus exemptions.”
My take: In the short term, this is good news for exchanges, as the compliance pathway is becoming clearer. But in the long run, the CFTC’s broad interpretation of its jurisdiction could pull many spot and lightly financed products directly into the regulatory framework, leaving retail traders with fewer assets and strategies to choose from. The tension between crypto and regulation has never been about “whether there are rules,” but about rules being so broad that they swallow everything.
$BTC traded sideways near $81,000 in early trading today—the market has grown numb to this kind of news. But don’t be mistaken: when the actual rules take effect, compliance costs will hit exchanges first, then trickle down to the fees you pay and the assets you can trade.
#CFTCSeeksCommentOnRetailDigitalAssetFramework
#CFTC #CryptoRegulation
The above does not constitute investment advice. DYOR; trading involves risk.
First, the backstory: On September 15, the Senate failed to end debate (49 to 50), effectively sinking the CLARITY Act. The Senate won’t return until November 9, and the 119th Congress is nearing its end, so the bill will have to start from scratch next year. For now, the legislative path is blocked.
So regulators are taking matters into their own hands. On October 5, the CFTC issued an advance notice of proposed rulemaking (ANPRM), seeking public comment on a plan to use its existing authority under Section 2(c)(2)(D) of the Commodity Exchange Act to create a tailored federal regulatory framework for retail crypto-asset transactions (CTXs) involving leverage, margin, or financing. The public comment period closes on December 14.
The proposed framework has two parts: Reg CTX, which would clarify which transactions fall under the CFTC’s jurisdiction; and Reg CAM, which would establish a “customized” DCM license category for exchanges that only handle CTXs.
The most intriguing point: The CFTC’s preliminary position is that even if a retail customer declines leverage and pays in full for their crypto, the transaction could still fall under its jurisdiction if the merchant had offered a leveraged option. “Paying in full still counts”—that’s a very broad interpretation.
Chairman Michael Selig said the goal is to ensure that “the United States remains the world’s crypto capital,” and to “prevent the next FTX before it happens, rather than prosecute it afterward.” He also stressed that not all crypto assets will be required to trade on CFTC-registered platforms.
Meanwhile, the SEC is also moving ahead with its own “Regulation Crypto Assets.” In this legislative vacuum, both agencies are competing for territory with “rules plus exemptions.”
My take: In the short term, this is good news for exchanges, as the compliance pathway is becoming clearer. But in the long run, the CFTC’s broad interpretation of its jurisdiction could pull many spot and lightly financed products directly into the regulatory framework, leaving retail traders with fewer assets and strategies to choose from. The tension between crypto and regulation has never been about “whether there are rules,” but about rules being so broad that they swallow everything.
$BTC traded sideways near $81,000 in early trading today—the market has grown numb to this kind of news. But don’t be mistaken: when the actual rules take effect, compliance costs will hit exchanges first, then trickle down to the fees you pay and the assets you can trade.
#CFTCSeeksCommentOnRetailDigitalAssetFramework
#CFTC #CryptoRegulation
The above does not constitute investment advice. DYOR; trading involves risk.