CFTC and SEC write parallel crypto rulebooks as CTX and CAM frameworks unveiled

The US Commodity Futures Trading Commission published an advance notice of proposed rulemaking on 5 October setting out two linked frameworks, Regulation CTX and Regulation CAM, that would bring crypto exchanges offering leverage under federal oversight.

The notice, announced in a CFTC press release, is an early step that seeks public input before formal rules are drafted. The public would have 60 days to comment once the notice appears in the Federal Register, which had not happened at the time of publication.

Two agencies, two rulebooks

The CFTC move runs alongside the Securities and Exchange Commission’s own crypto rulemaking. The SEC proposed Regulation Crypto Assets in August and unveiled an innovation exemption for tokenised stocks last month, so two federal agencies are now writing parallel crypto rulebooks with no published plan for how the frameworks interact.

The CFTC plan rests on a 2010 Dodd-Frank provision requiring retail commodity trades offered with leverage, margin or financing to take place on a CFTC-registered exchange, as if they were futures. Regulation CAM would create a “crypto asset market” licence, a tailored version of the designated contract market status held by futures exchanges.

Where the frameworks could collide

The jurisdictional boundary is the leverage hook. Under Regulation CTX, simply offering leverage, even through routine onboarding documents or terms of service, could pull fully paid trades under the agency’s watch as long as the purchased crypto sits on the exchange’s internal books rather than the customer’s own wallet. Trades escape federal oversight only through “actual delivery”, which the CFTC suggests could require customers to hold their private keys. That standard is a preliminary suggestion, not a settled rule.

For the SEC, the same tokens on the same venues could raise securities questions under its own Regulation Crypto Assets proposal. Which agency claims which trades is not resolved by either notice.

Under CAM, trades would run through futures commission merchants, brokers subject to anti-money laundering rules, and leverage could come only from those brokers or banks they sponsor. The CFTC is weighing proof-of-reserves requirements and standards against listing tokens prone to manipulation, both still under consideration rather than decided.

CFTC Chairman Michael Selig said the rules are “designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX”. The notice also repudiates the agency’s past approach, describing its Biden-era cases against Kraken, Ooki DAO and Uniswap as “regulation by enforcement”.

The CFTC sent the framework to the White House for review in September, days after the Clarity Act failed in the Senate. Exchanges that do not offer leverage could keep operating under state money transmitter licences.