CFTC Proposes Crypto Exchange Framework After CLARITY Act Setback

The US Commodity Futures Trading Commission (CFTC) has outlined a proposed framework for certain crypto exchanges after the Senate failed to advance the Digital Asset Market Clarity (CLARITY) Act.

Speaking at Fordham Law’s Blockchain Regulatory Symposium on October 5, CFTC Chair Michael S. Selig said the agency would use its existing statutory powers to deliver President Donald Trump’s promise of a crypto asset regulatory market structure “with or without legislation.”

The CFTC has issued an advance notice of proposed rulemaking on Regulation CTX, covering margined, leveraged, or financed retail crypto transactions, and Regulation CAM, which would establish a tailored framework for crypto exchanges. Firms offering only these transactions could register as a designated contract market (DCM) or seek designation as a crypto asset market (CAM), a new subcategory of DCM.

The proposals consider protections against market manipulation, safeguards for customer funds, and proof-of-reserves requirements for exchanges holding customer assets in pooled accounts.

Selig also said the proposed rules envisage these crypto transactions being intermediated by futures commission merchants. These firms would be subject to applicable AML, customer identification, and suspicious activity reporting requirements under the Bank Secrecy Act.

The framework would not extend to ordinary spot crypto exchanges, which generally remain regulated under state money transmission laws. However, the CFTC would retain its authority to take action against fraud and market manipulation in those markets.

The announcement follows the Securities and Exchange Commission’s August proposal for a tailored crypto securities offering regime. Both agencies are pursuing regulatory changes using their existing powers following the legislative setback of the CLARITY Act, with the CFTC initiative still at the preliminary rulemaking stage.