Congress Did Not Legislate, So the CFTC Wrote Its Own: A Proposed Crypto Asset Market License Opens the Front Door to Retail Leveraged Spot Trading
On October 5 the U.S. Commodity Futures Trading Commission proposed a federal framework creating a new registration category, the crypto asset market, for exchanges that offer leveraged and margined spot crypto trading to retail customers.
Three key facts
According to The Block, the proposal comes as two rules, Regulation CTX and Regulation CAM, covering leveraged and margined spot crypto trading for retail customers, a gray zone that no federal regulator had clearly claimed until now.
Chair Michael Selig: the American people deserve clarity, certainty and consumer protections in the crypto asset markets. He also drew the limit: without congressional action, the agency does not have the authority to require that crypto assets trade only on CFTC-registered platforms. In other words, this is an invitation to register, not a summons.
The timing follows the CLARITY Act's failure in the Senate in September. Four days earlier the SEC voted on its 760-page custody proposal, and on September 17 the SEC issued a five-year innovation exemption that the OKX and Intercontinental Exchange venture is now using to file for tokenized stock trading. With Congress stalled, the two regulators are each writing their own rulebook.
WangDou's Take
Congress killed the CLARITY Act in September, so the SEC and the CFTC are each writing their own: the SEC's 760 pages on custody last week, the CFTC on leverage this week. In plain language: the parents fought and never set house rules, so the two housekeepers each drew up their own. Selig admits that without Congress he cannot compel anyone, which makes this a welcome-to-register invitation, not a must-register summons. Opening the front door to retail leverage is being sold as consumer protection. Any old founder knows the most effective way to protect a retail trader has always been to keep him off leverage, not to license it. The good news is that regulators have stopped pretending not to see. The bad news is that this rulebook lives only as long as the next chair's mood, because there is no law behind it.
Source: The Block · CFTC proposes federal framework for leveraged retail crypto trading