CFTC proposes federal framework for leveraged crypto trading as Congress stalls regulation

The proposed framework would create a new category of federally regulated crypto trading venues, with requirements covering market manipulation, proof of reserves and trade intermediation. Exchanges offering leveraged products would need to clear those offerings with CFTC staff. The proposal comes as the Trump administration’s regulators face pressure to provide clarity following Congress’ failure to advance broader legislation.

The US commodities regulator proposed on Monday a new federal framework for cryptocurrency exchanges that offer leveraged digital asset trading, seeking to bring parts of the spot crypto market under federal oversight weeks after Congress failed to advance comprehensive crypto regulation. The US Commodity Futures Trading Commission’s proposed rules would effectively allow US crypto exchanges to opt into a federal regulatory framework instead of relying primarily on a patchwork of state money-transmitter licenses, the agency said. The proposed rules make use of a specific authority the CFTC has to oversee margined or leveraged spot assets. The CFTC has long sought authority to regulate spot cryptocurrency markets — which currently operate in a regulatory grey area — but only Congress has the ability to provide the regulator with that purview.

“For years, entrepreneurs building on the new frontier of finance faced uncertainty about whether there was a place for them in our markets. We are giving them an answer,” said CFTC Chairman Michael Selig in a speech on Monday at an event in New York held by Fordham University’s law school.

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