The CFTC Has Started Writing Crypto Market Rules Without Waiting for Congress

The Commodity Futures Trading Commission published an Advance Notice of Proposed Rulemaking on October 5 setting out how it might regulate retail crypto trading using the authority it already has. The notice concerns retail commodity transactions in crypto assets — the agency's shorthand is CTXs — under section 2(c)(2)(D) of the Commodity Exchange Act, and it seeks public comment before any rule is drafted.

An advance notice is a step before a proposal. There is no draft regulatory text to read. What the document does is name two frameworks the Commission is considering and ask whether they are the right shape.

The two contemplated parts

Regulation Crypto Asset Transactions would address the transactions themselves. Regulation Crypto Asset Markets would address where they happen, by codifying a subcategory of designated contract market registration purpose-built for crypto asset exchanges that want to operate under a single federal market-regulatory scheme. On the CFTC's own account that second route would be optional rather than mandatory.

The Commission asks for comment on three things in particular:

1. Ways to prevent abusive practices in crypto asset markets and in CTXs under a single national regime.
2. Ways to give market participants crypto-specific guidance on the practices the CFTC considers best practice for complying with CTX requirements, drawing on its oversight of crypto markets since 2014.
3. Ways to codify, through rulemaking, a designated contract market subcategory called a crypto asset market, built specifically for CTXs.

The American people deserve clarity, certainty, and consumer protections in the crypto asset markets.

Where the on-exchange requirement would stop

Section 2(c)(2)(D) reaches retail commodity transactions that involve leverage, margin or financing, and it carries an exception for transactions that result in actual delivery. According to an analysis of the notice by the law firm Baker Botts, the contemplated framework would apply an on-exchange requirement where retail customers are offered leverage, margin or financing — including trades the customer fully pays for — and that requirement would end once the customer takes actual delivery, such as a transfer to a wallet the customer controls. After delivery the Commission preliminarily views the transaction as outside the on-exchange requirement, while its antifraud and antimanipulation authority continues to apply.

Baker Botts also records that Regulation CTX and Regulation CAM went to the Office of Information and Regulatory Affairs on September 17 and that review concluded on October 2, three days before the announcement.

Why now

The House passed the CLARITY Act, H.R. 3633, in July 2025. On September 15 this year the Senate failed to invoke cloture on it, 49-50, against the 60 votes required. The Senate returns on November 9, and on Baker Botts's reading the bill would likely need reintroduction once a new Congress convenes in January 2027.

The difference between the bill and the agency's notice matters. The CLARITY Act would have required crypto asset trading to take place on CFTC-registered platforms. The contemplated CFTC framework would not; the Chairman has said the agency cannot impose a mandatory platform requirement without Congress. What it can do is set conditions for the transactions already within section 2(c)(2)(D) and offer an optional registration category to exchanges that want one.