CFTC opens rulemaking to let platforms offer leveraged crypto trading

The Commodity Futures Trading Commission has opened a new front in the fight to pull crypto trading volume back from offshore venues, dangling federal leverage access as the incentive. The move comes as Congress remains stalled on comprehensive market-structure legislation, leaving the agency to rely on authority it says it already holds.

• CFTC published an Advance Notice of Proposed Rulemaking on Monday (October 5) covering Regulation CTX and Regulation CAM.
• Public comments are due within 60 days of the ANPRM’s Federal Register publication, according to the agency.
• Wallet transfers completed within 28 days of a trade would generally satisfy the Commodity Exchange Act’s “actual delivery” exception.

• 60 days public comment window set after Federal Register publication of the ANPRM
• 28 days wallet-transfer window that would satisfy the “actual delivery” exemption
• Oct. 5 date the CFTC opened rulemaking for the new CTX and CAM frameworks

The Commodity Futures Trading Commission published an Advance Notice of Proposed Rulemaking on Monday (October 5) laying out a path toward Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM), according to a CFTC press release. The framework, first detailed by CryptoSlate, would give platforms a federal route to offer retail customers margined, leveraged or financed crypto trading. Participation would stay optional for ordinary spot exchanges, which the agency acknowledges it cannot force onto CFTC-regulated venues without action from Congress.

Leverage becomes the lure in a three-tier registration map

The proposal sorts exchanges into three categories depending on what they want to offer US customers. Spot exchanges could stay under state money-transmitter licensing, backed by the CFTC’s existing anti-fraud and anti-manipulation authority. Platforms offering leveraged or financed crypto trades could instead register federally under CTX and CAM, while venues trading futures and perpetual contracts would remain under the commission’s existing designated contract market regime.

Hyperliquid Policy Center described the structure as a clearer regulatory ladder in a post on X, with state oversight for spot activity, federal CFTC supervision once leverage enters the picture, and the existing derivatives framework for futures and perpetuals. The legal basis is Section 2(c)(2)(D) of the Commodity Exchange Act, which governs certain leveraged retail commodity transactions.

Leveraged products and perpetual contracts have long given offshore exchanges an edge over US platforms, which have operated with a narrower product menu under current rules. Larry Florio, deputy general counsel at synthetic-dollar developer Ethena Labs, called retail leverage the proposal’s central draw, arguing it could be enough on its own to pull exchanges into a single federal regime voluntarily.

FTX’s collapse shapes new custody and reserve requirements

Chairman Michael Selig framed the initiative around lessons from FTX’s 2022 bankruptcy, arguing regulators should build preventive safeguards rather than lean on enforcement after customers have already lost funds. Selig said that “the lesson from FTX’s failure should have been obvious,” arguing that protecting customers from fraud should coexist with responsible crypto innovation.

CAM operators would face requirements already standard for designated contract markets, covering financial integrity, market surveillance, conflicts of interest and operational safeguards. The agency is also weighing crypto-specific tests, including assessments of token concentration, distribution methods, vesting schedules, lockups, programmatic issuance and buybacks when deciding whether an asset is tradable without being easily manipulated. Platforms holding customer assets in omnibus accounts could additionally face proof-of-reserves requirements, a safeguard Selig tied directly to the risks exposed by FTX’s failure.

Customer CTX trades would run through registered futures commission merchants, bringing accounts under capital, disclosure and segregation rules. That intermediation would also pull customer-facing activity under Bank Secrecy Act obligations, including anti-money laundering controls, identity checks and suspicious-activity reporting, raising the compliance cost of opting in well beyond registration fees.

Selig says shipping code shouldn’t trigger broker registration

The CTX proposal would also clarify the Commodity Exchange Act’s “actual delivery” exception, treating transfers to a customer’s external non-custodial wallet within 28 days as generally satisfying the exemption from exchange-trading requirements for certain leveraged retail transactions.

Selig separately addressed how the agency might treat developers who publish software without taking customer orders, controlling execution or holding customer assets. “A person should not have to register as an introducing broker simply because that person shipped code,” he wrote on X.

The ANPRM leaves the hardest numbers undecided. Leverage limits, capital standards and how far FCM intermediation would reshape exchanges’ vertically integrated custody-and-brokerage models are all still open for comment rather than fixed in the proposal.

The BlockWest read. The real decision here sits with exchange balance sheets, not compliance teams. Opting in means unwinding the combined exchange-brokerage-custody model that has made crypto platforms cheaper to run than traditional brokers, in exchange for leverage revenue that offshore rivals already capture freely. Firms like Ethena, whose products depend on where collateral and leverage flow, will be watching which major exchanges blink first.

The CFTC is accepting public comment on the ANPRM for 60 days from its Federal Register publication, with submissions posted to Regulations.gov, before it moves toward drafting detailed rules on leverage limits, custody and intermediary requirements. Whether any major US exchange judges federal leverage access worth surrendering structural flexibility for remains the open question the agency’s own filing does not answer.

BlockWest is a news publication. Nothing here is investment advice. Read our disclaimer and editorial policy.