Congress Stalled, So the CFTC Started Writing the Crypto Rulebook

KEY HIGHLIGHTS

• The action: The CFTC published an advance notice of proposed rulemaking on October 5, 2026 covering Regulation CTX (crypto asset transactions) and Regulation CAM (crypto asset markets), filed under RIN 3038-AF80 and amending 17 CFR Parts 1, 38 and 39, per Release 9307-26 and Baker Botts.
• The document: The notice runs 109 pages, frames questions rather than proposing regulatory text, and opens a 60-day comment window from Federal Register publication, per CryptoTicker and Securities.io.
• The authority: The framework rests on CEA Section 2(c)(2)(D), added by Dodd-Frank on July 21, 2010, which treats leveraged retail commodity transactions as if they were futures; the CFTC enforced it for 16 years without writing rules under it, per the notice and National Law Review.
• The explicit limit: Chairman Michael S. Selig wrote that the rules cannot mandate that all crypto exchanges register: "We don't have the authority to impose such a requirement without congressional action," per his WSJ op-ed.
• The trigger: The Senate failed to advance the Clarity Act this month, and the framework follows a joint CFTC-SEC interpretation that bitcoin and ether are non-securities under CFTC authority, per the op-ed and Cryptonews.net.

On October 5, the Commodity Futures Trading Commission opened the first federal rulemaking written specifically for crypto trading. The document, an advance notice of proposed rulemaking titled Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets under File No. RIN 3038-AF80, runs 109 pages and spans 17 CFR Parts 1, 38 and 39. It proposes two linked frameworks: Regulation CTX, which would identify which retail crypto transactions fall under Section 2(c)(2)(D) of the Commodity Exchange Act, and Regulation CAM, a purpose-built subcategory of designated contract market registration for exchanges that list them. Comments are due within 60 days of the notice's publication in the Federal Register; as of October 7 it had not yet been published there.

The striking fact is not the content of the proposal. It is that the authority it exercises has existed since July 21, 2010, when the Dodd-Frank Act amended the Commodity Exchange Act to treat leveraged retail commodity transactions as if they were futures, and the CFTC spent the following 16 years enforcing that authority through litigation without ever writing the rules. What changed was not the statute. It was the Senate's failure this month to advance the Clarity Act, the market-structure bill that would have legislated the framework outright, which converted the agency's dormant rulewriting power from a backstop into the main instrument.

What the notice actually contains

The first thing to state plainly, because early coverage got it wrong: this is a consultation, not a rule. The document's action line reads advanced notice of proposed rulemaking, the earliest stage of the federal rulemaking process. It contains no binding obligations, no draft regulatory text, and no leverage caps. Some Tuesday reports described a registration requirement and a duty to prove reserves; the registration structure appears as a question about how to build the CAM subcategory, and the proof-of-reserves concept appears as a topic on which the agency requests comment. The ANPRM is followed, if the agency proceeds, by a proposed rule, another comment round, and a final rule, a sequence that routinely takes years.

What the document does do is set out a full architecture. Section III states the agency's preliminary understanding of which transactions are CTXs: agreements offered to retail customers on a leveraged, margined or financed basis, the category Section 2(c)(2)(D) has reached since 2010. The notice defines a crypto asset as any digital representation of value recorded on a cryptographically-secured distributed ledger. It proposes to codify an interpretation of the actual-delivery exception: delivery of a crypto asset to a user's external, non-custodial wallet within 28 days generally satisfies the statutory carve-out, so a fully paid purchase that is withdrawn to self-custody leaves the futures regime while a position that sits on an exchange's internal book-entry stays inside it. The CAM subcategory would sit beneath the existing designated contract market category, holding exchanges to the statutory core principles through regulations adapted to crypto rather than through the futures rulebook wholesale.

Three operational requirements are contemplated. First, CTXs would be intermediated by futures commission merchants, which manage customer accounts and funds under the Act's disclosure, capital and customer-property segregation requirements. Second, FCM intermediation would bring customer-facing activity on a CAM under the Bank Secrecy Act's anti-money-laundering, customer identification and suspicious activity reporting rules. Third, the CAM proposal contemplates a proof-of-reserves obligation for exchanges that hold customer property in omnibus accounts, which Selig said "would have benefitted FTX's retail customers." Each of these appears as a design choice the agency has sketched and asks the market to stress-test.

The ladder and the line the agency will not cross

In remarks at the Fordham Law Blockchain Regulatory Symposium on October 5, published alongside the notice, Selig described the registration landscape as a ladder. The first rung holds ordinary spot exchanges, subject to CFTC anti-fraud and antimanipulation authority but otherwise regulated under state money transmission law. The second rung holds exchanges that offer retail customers leveraged, margined or financed trading, which Congress already requires to register with the CFTC; the proposal builds this rung. The third holds exchanges that also offer perps and other derivatives, already inside the designated contract market framework. Registered DCMs could add CTX trading under tailored rules; firms wanting to offer only CTXs could register as an ordinary DCM or as a CAM.

The line the agency will not cross is the one that makes this a partial answer. Unlike the Clarity Act, the proposed regulations would not require crypto assets to trade on CFTC-registered platforms. Selig wrote it himself: "We don't have the authority to impose such a requirement without congressional action." An exchange that confines itself to ordinary spot trading, the first rung, stays where it is, under state law, with no federal market-regulatory regime beyond antifraud enforcement. The proposal is elective by design: it offers a single federal scheme to exchanges that want one, at the price of the obligations above, and changes nothing for venues content to stay state-licensed. The gap the Clarity Act would have closed, universal federal registration, remains open, and the notice says so.

That structure is also what makes the proposal politically durable. An elective regime that no one is forced into is harder to attack as federal overreach than the mandatory regime Congress failed to pass, and it proceeds under authority the agency already holds rather than waiting for legislation. Selig framed the project as rulemaking under "President Trump's directive to propose a federal crypto asset regulatory market structure using the CFTC's existing statutory authorities." The administration gets a federal framework to point to; the industry gets an option rather than a mandate; the states keep the spot market the Clarity Act would have preempted. Everyone gives something up, which is usually the sign of a rule that can actually be finished.

The precedent already running

The proposal does not arrive into a vacuum. The National Law Review notes it follows Bitnomial's launch of the first leveraged retail spot crypto product listed on a CFTC-registered designated contract market, meaning one exchange has already run the registration route the notice would formalize. The joint CFTC-SEC interpretation earlier in 2026 established the jurisdictional floor, holding that bitcoin and ether are non-securities within the CFTC's authority, so the ANPRM's definition of covered assets lands on ground the two agencies have already mapped together. And the agency has a body of practice to draw on: the notice asks for comment on compliance practices the Commission has observed since it began overseeing parts of these markets in 2014, converting twelve years of enforcement experience into proposed guidance.

Read against that sequence, the ANPRM is the moment a regulator stops suing and starts writing. Every enforcement action the CFTC brought against leveraged crypto platforms was an application of Section 2(c)(2)(D) without a rulebook: the agency won cases by arguing the statute reached conduct the defendant could not have looked up. The notice's own framing acknowledges the shift, with Selig promising regulations "designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX." Prevention through codified obligations, rather than deterrence through litigation, is the entire difference between the two approaches, and the 109 pages are the first draft of the codification.

What to watch

Four questions will determine what becomes of this. First, the Federal Register publication date, which starts the 60-day clock; the notice had not appeared there as of October 7, so the comment deadline cannot land before December. Second, whether the CAM subcategory survives the comment process as a registration pathway exchanges actually want, since the obligations attached to it, FCM intermediation, BSA coverage, proof of reserves, are the price of the single federal scheme, and the market's comments will reveal whether that price is one anyone will pay. Third, whether the actual-delivery interpretation holds in its proposed form, because the 28-day wallet-withdrawal line determines which transactions are CTXs at all, and it is the provision with the most direct effect on how exchanges currently operate. Fourth, whether Congress takes the notice as an invitation to legislate or as a substitute for legislating; the elective structure leaves the mandatory-registration gap open, and every stakeholder that wanted the Clarity Act has an incentive to argue the gap still matters.

The Free Markets Report has followed this file from the OIRA submission through the joint interpretation to this notice. The pattern across both agencies this fall is consistent: where Congress stalled, the regulators wrote. The SEC's custody package built the adviser framework legislation could not, and the CFTC's notice builds the exchange framework the Clarity Act would have mandated. Both proceed under authority the agencies already held, both stop short of the universal coverage legislation would have imposed, and both leave the same gap with the same entity: only Congress can close it, and this month it declined to.

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