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ZEC $1,323 U.S. CFTC Proposes First Crypto Rules Under CTX and CAM After CLARITY Act Fails
The CFTC's first-ever crypto rulemaking would let exchanges opt into a federal regime and seeks public comment for 60 days.
Key takeaways
- Two frameworks proposed. The CFTC has proposed its first-ever crypto rules under two regulatory frameworks, Regulation CTX and Regulation CAM.
- Comment period lasts 60 days. The preliminary rulemaking notice is open for public comment for 60 days after publication in the Federal Register.
- First-ever rules published. The CFTC published an Advanced Notice of Proposed Rulemaking for its first-ever crypto rules.
What happened
The U.S. Commodity Futures Trading Commission has proposed new rules to regulate digital asset transactions and markets. The agency published an Advanced Notice of Proposed Rulemaking for its first-ever crypto rules under two frameworks: Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM).
If approved, the new rules would allow crypto exchanges offering the leveraged trades to register with the regulator. CFTC Chair Mike Selig said the action is a critical step in the agency's ongoing efforts to ensure America remains the crypto capital of the world.
The Commission is seeking public comments on topics such as how it can prevent abusive practices in crypto trading under a uniform national regime. It also seeks comments on how best to codify a subcategory of designated contract market registration for crypto transactions.
The CFTC chair explained in an opinion article that Regulation CTX and CAM would establish requirements for CFTC-registered exchanges that offer crypto trading. Unlike state-licensed exchanges, these CFTC-registered platforms could offer margin and leverage trading to retail customers.
Why it matters
Selig distinguished the proposed rules from the CLARITY Act, noting that the regulations wouldn't require crypto trading on CFTC-registered platforms. He said the rules would establish a purpose-fit option for crypto-asset exchanges that wish to operate under a single federal market-regulatory scheme.
The move follows the Senate's cloture vote failure on the CLARITY Act last month. The CFTC and Securities and Exchange Commission have pressed ahead with proposing rules to regulate the digital asset industry.
Selig warned that the rules could not substitute for a statutory framework, and that the CLARITY Act remains necessary.
Background
The Clarity Act wants to formally divide oversight between regulators, distinguishing which digital assets are securities, commodities or stablecoins. But the bill stalled and stumbled this year as the banking lobby had issues with crypto companies paying customers stablecoin rewards and some lawmakers, mostly Democrats, were concerned about the ethics side of the legislation.
The SEC also moved ahead. It approved tokenized stocks trading in September and proposed its own framework for crypto asset offerings in August. Trump in August urged lawmakers to get the Clarity Act over the line, calling the proposed legislation very powerful.
What is still unclear
- It is unclear whether the CFTC will issue a formal proposed rule after reviewing public comments. The agency said it will review the feedback and decide whether to issue a formal proposed rule, which would go through another comment period before any final rule is adopted.
- It is unclear how the CLARITY Act will proceed after the failed cloture vote in the Senate.
- It is unclear whether the rules would apply to all crypto exchanges or only those that opt in. The proposal would allow exchanges offering leveraged trades to register with the regulator.
Questions readers ask
What are the CFTC's new crypto rules called?
The rules are under two frameworks: Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM). The CFTC has proposed them as its first-ever crypto rules.
How long is the public comment period?
The CFTC's preliminary rulemaking notice is open for public comment for 60 days after it is published in the Federal Register.
Does the CFTC proposal require crypto exchanges to register?
No. CFTC Chair Mike Selig said the regulations wouldn't require crypto trading on CFTC-registered platforms. He said the rules would establish a purpose-fit option for exchanges that wish to operate under a single federal market-regulatory scheme.
What happened to the CLARITY Act?
The Senate's cloture vote on the CLARITY Act failed last month. The CFTC and SEC then moved ahead with these proposed rules in the meantime.
