CFTC Unveils Two-Pronged Proposal to Regulate Crypto Markets

The U.S. Commodity Futures Trading Commission (CFTC) has released a sweeping proposal aimed at setting clearer ground rules for crypto market trading. Chair Mike Selig formally announced the plan on October 5 after an initial, confidential review at the White House. The move follows a pledge the CFTC made with the U.S. Securities and Exchange Commission (SEC) to issue regulatory direction for the crypto sector after the collapse of the CLARITY Act. Under the draft, CFTC-registered crypto exchanges would operate under a bespoke CFTC regime rather than being pushed into traditional securities frameworks that critics say are ill-suited for digital assets. The proposal is organized around two separate rule frameworks: Regulation Crypto Asset Transactions (Regulation CTX) Regulation CTX focuses on the derivatives and financing layer of the crypto industry. It would regulate retail crypto trading involving borrowed funds, leverage, and margin under Section 2(c)(2)(D) of the Commodity Exchange Act. The CFTC said it would treat crypto bought and transferred to a noncustodial wallet as an "actual delivery" if the transaction is completed within 28 days, a standard intended to keep ordinary spot purchases and self-custody from falling into heavier exchange-style regulation. Regulation Crypto Asset Markets (Regulation CAM) Regulation CAM addresses market structure and platform registration. The CFTC proposes customized, optional federal licenses for crypto exchanges through its Designated Contracts Management (DCM) system. The license would require strict operational protections, including proof-of-reserves audits, anti-money laundering safeguards, and mandatory intermediation by the commission's merchants. A central feature is the ability for participating exchanges to bypass fragmented state-by-state requirements by adopting a single federal registration. The framework would also allow licensed platforms to offer retail customers financed or leveraged trading—activities typically prohibited for state-level spot market trading. The CFTC would retain overarching oversight of the system. Next steps Once published in the Federal Register, the proposal will open a 60-day public comment period for stakeholders, industry participants, and the broader public. Crypto industry figures welcomed the development. Coinbase CEO Brian Armstrong wrote on October 5, 2026: "Great to see the CFTC moving forward on rulemaking for crypto, opening up the public comment period. Thank you @ChairmanSelig for your leadership." Legal observers cautioned that, while the proposal is constructive, the guidance may not be durable and could be revised with leadership changes at the agency or shifts in presidential administration.