CFTC Seeks Comment on Leveraged Retail Crypto Rules
The CFTC seeks comment on a federal framework for leveraged retail crypto trades, including a tailored exchange category and a 60-day response window.
The Blockheight Editors··2 min read
On Oct. 5, the CFTC published an advanced notice seeking comment on a federal framework for retail crypto trades using leverage, margin or financing, according to the agency’s announcement. The process could lead to national rules and a new exchange registration category for these transactions, which the commission calls CTXs.
What exchange route is the CFTC considering?
The notice seeks input on a tailored subcategory of designated contract market registration, called a crypto asset market, or CAM. CFTC Chairman Michael S. Selig said in his announcement that the framework would give exchanges a federal route to offer CTXs under rules designed for crypto markets.
The Block reported that this route could provide an alternative to state-licensed exchanges. The CFTC’s notice says the proposal concerns transactions covered by section 2(c)(2)(D) of the Commodity Exchange Act; it does not say all crypto exchanges would have to register federally.
What protections and requirements are under discussion?
The CFTC is asking how a uniform national regime could prevent abusive practices in crypto markets and what crypto-specific information could help firms meet existing requirements. It also seeks comment on codifying CAM registration as a purpose-built category for exchanges offering CTXs.
In a separate statement describing the framework, Selig said the agency envisions customer funds and accounts handled by futures commission merchants, which are subject to customer protection requirements. The CFTC release describes the current action as the start of a process to gather information, not a final rule or a settled set of requirements.
When can the public respond?
Written comments are due within 60 days after the advanced notice is published in the Federal Register, according to the CFTC. The agency says it will use the comments to inform possible future action, including rulemaking. The final requirements, if any, and the timing of any later rule proposal remain unconfirmed.
Source material
- announcement — cftc.gov