CFTC seeks comment on crypto transaction and market rules

The Commodity Futures Trading Commission today published an Advanced Notice of Proposed Rulemaking covering retail commodity transactions in crypto assets under section 2(c)(2)(D) of the Commodity Exchange Act. The agency is asking the public to weigh in before it drafts actual rule text, a step that precedes any binding requirement on exchanges, brokers or custodians.

• ANPRM covers what the CFTC labels CTXs, retail commodity transactions involving crypto assets
• Agency floats a new DCM subcategory called “crypto asset market” built specifically for CTXs
• Comments due within 60 days of the ANPRM’s publication in the Federal Register

• 60 days comment window from Federal Register publication
• 2014 year CFTC says its crypto market oversight experience began

The order states the Commission intends to build “a comprehensive regulatory framework comprised of fit-for-purpose rules” addressing retail crypto transactions under the CEA’s existing statutory provisions rather than new legislation. The release identifies three areas for comment: preventing abusive practices in crypto markets under a uniform national regime, giving market participants crypto-specific guidance on industry practices the agency has observed since 2014, and codifying a new registration subcategory of designated contract market status purpose-built for CTXs.

Chairman Michael S. Selig framed the move as preventive rather than reactive. “Under my leadership, the Commission will take every necessary step to establish regulations that are designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX,” he said, according to the release. Comments will be collected and posted publicly on Regulations.gov, though the CFTC release does not specify the exact calendar date the 60-day clock starts, since that depends on when the ANPRM appears in the Federal Register rather than the October 5 press release date.

A bespoke registration lane for spot crypto venues

The proposed “crypto asset market” subcategory would sit inside the existing designated contract market structure but be tailored to CTXs rather than the futures and options products DCMs were originally built to list. For exchanges now operating spot crypto venues under state money-transmitter licenses or ad hoc no-action relief, a purpose-built federal registration could consolidate compliance under one regulator.

The release does not say what capital, custody or disclosure obligations would attach to the new category, nor whether existing DCMs such as CME or ICE would need to seek a separate license to list CTX products. Those details are reserved for a future proposed rule, which the ANPRM explicitly describes as a possible, not certain, next step.

What the filing leaves open

The release also does not name which crypto assets would qualify as commodities for purposes of section 2(c)(2)(D), leaving the asset-classification question, long contested between the CFTC and SEC, unresolved in this document.

“Today’s action is a critical step in the CFTC’s ongoing efforts to ensure America remains the crypto capital of the world.”

Michael S. Selig, CFTC Chairman

The BlockWest read. This ANPRM signals the CFTC intends to claim jurisdiction over spot crypto trading using authority it already has, rather than waiting on Congress. Exchanges weighing where to seek a federal license now have a concrete, if unfinished, target to comment on. The real test comes when the agency converts comment feedback into a proposed rule with enforceable capital and custody terms, which this filing does not yet set.

Comments are due within 60 days of the ANPRM’s Federal Register publication, a date the CFTC release does not specify; market participants should watch the Federal Register for the formal publication notice that starts the clock.

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