The Commodity Futures Trading Commission (CFTC) has begun preparing a federal crypto market structure it can pursue under existing law if Congress fails to pass CLARITY.

CFTC Chairman Michael S. Selig announced the work Thursday in official remarks, saying his staff are now examining rules that could bring both registered companies and currently unregistered crypto exchanges under a purpose-built CFTC framework. Selig is also working with SEC Chairman Paul Atkins through Project Crypto on an asset classification system, an effort aimed at the jurisdictional fault line that has run beneath U.S. crypto since regulators began dividing tokens between securities law at the SEC and commodity law at the CFTC. The CFTC, however, is not planning to leave the market in limbo if CLARITY dies on Capitol Hill.

The stakes of that backup plan are straightforward. The CLARITY Act passed the House in July 2025 with bipartisan support and would assign digital-commodity spot oversight to the CFTC while leaving token securities with the SEC; it has since awaited Senate action. Absent legislation, cash crypto markets sit mostly outside the CFTC's direct regulatory perimeter, which is why a derivatives instrument — the DCM designation anchored in leveraged and margined trading — is the vehicle for the plan Selig outlined.

CFTC prepares its own crypto rules while Congress decides CLARITY's fate

Selig noted that the CFTC already has the authority to designate a new type of designated contract market (DCM) centered on crypto. Current registered CFTC entities would be able to join, while unregistered cryptocurrency exchanges could apply for such designation. The framework would apply to margined and leveraged cryptocurrency trades, with regulation designed specifically for these products.

"To achieve this, I've directed the CFTC staff to begin exploring rules to codify a CFTC market structure for crypto assets using the agency's existing authorities," Selig said. "This could enable current registrants as well as non-registrant crypto exchanges to be designated by the CFTC as a type of DCM known as a crypto asset market and offer crypto asset trading on a leveraged or margined basis subject to purpose-fit rules under the CFTC's regulatory oversight."

The emphasis on leveraged and margined products tracks where the agency's statutory reach is clearest. CME Group, a registered DCM, has listed regulated bitcoin futures since December 2017 and ether futures since 2021, so federal supervision of crypto already exists through that traditional channel; the crypto asset market concept would extend the same architecture to platforms that currently operate outside it.

The chairman also wants CFTC staff to speak with protocol developers about how their products can be sold in the United States without those developers having to wonder where the boundary of legality lies.

"I've also directed staff to engage with developers of onchain finance protocols to establish ways in which developers can offer their protocols in a legal and compliant manner in the United States," Selig said. "Future-proofing developer protections once and for all."

Selig said CLARITY will still be given time for a congressional vote. If lawmakers cannot agree, however, he plans to direct staff to begin the CFTC rulemaking process.

"We're going to give CLARITY its breathing room for a vote, but if the Democrats cannot support a bipartisan work product, which reflects compromises from both sides of the aisle, and ultimately send a fair version of the bill to the President's desk, then rest assured, I will direct CFTC staff to move swiftly to propose these new rules for the industry," Selig said.

The chairman tied that approach to the CFTC's own history. Congress created the agency in 1974 after derivatives markets had moved well beyond the agricultural contracts covered by older federal laws. Currency contracts, petroleum allocations and Ginnie Mae certificates were among the newer instruments emerging at the time.

The roots reached back much further. Merchants formed the Chicago Board of Trade in 1848 above a flour store. By 1859, traders had developed arrangements that allowed contracts to settle based on changes in commodity prices instead of always requiring physical delivery. Futures were born, and politicians quickly began calling the activity gambling.

Congress eventually created a single federal framework rather than dividing derivatives regulation according to whatever commodity sat underneath a contract. The CFTC received "exclusive jurisdiction" over commodity derivatives and a legal mandate to "promote responsible innovation."

The definition of a commodity was intentionally wide. It could cover physical goods, services, rights, interests, events, and other underlying subjects used in derivatives. Federally regulated DCMs then became the main venues for these contracts, while also acting as self-regulatory organizations responsible for enforcing market rules. That breadth is the legal foundation Selig is invoking for crypto, compute, and event contracts alike.

Selig expands the CFTC roadmap into AI compute and prediction markets

The CFTC is also preparing for financial markets built around AI compute and expanding its rulebook for prediction markets.

"We've crossed the Rubicon and are standing at a new frontier of finance," Selig said. "It's not a question of whether innovations like blockchain, artificial intelligence, and prediction markets will transform our markets. It's a question of where this innovation will take place and who will write the rules."

On AI, the agency is treating computing capacity as an increasingly important economic resource. Advanced GPU clusters are expensive and scarce, while demand keeps rising. Selig said spot, forward, and derivative markets could develop around compute to provide pricing and hedging tools.

The CFTC issued a request for comment on compute markets earlier this week and is working with the Department of Commerce. The administration's AI plan also calls for better access to large-scale compute for startups and researchers. Requests for comment are the standard first step federal agencies use to gather industry input before deciding whether to propose rules, giving chipmakers, cloud providers, and exchanges a formal channel to weigh in on how a compute market might be structured.

"Access to advanced GPU clusters and compute capacity increasingly determines who can compete, who can innovate, and ultimately, who can lead," Selig said. "As demand for compute grows, so too does the need for markets capable of efficiently allocating scarce resources and managing risk."

On prediction markets, the agency has put forward proposals to modify CFTC Rule 40.11. Event contracts cannot be permitted to fail to meet core principles or to be easily manipulated. War and terrorism, assassination, gaming, and criminal acts receive additional consideration under federal law, and the CFTC may prohibit contracts in those areas. The rulemaking lands amid rapid growth in event contracts: Kalshi, a CFTC-regulated exchange, began listing election contracts in October 2024 after a federal appeals court declined to block them and has since expanded into sports, while Polymarket settled with the CFTC in 2022 over unregistered operation and agreed to block U.S. users. That growth is the practical backdrop for the definitional gaps Selig is targeting.

The problem is that terms including "gaming" and "involve" are not defined in the statute, while the law also lacks a fixed test for determining the public interest. Any amendment to Rule 40.11, like any crypto asset market rule, would still need to clear the standard notice-and-comment process before the commission votes on a final version, so the pace at which proposals actually reach the Federal Register will be the measure of how far the agency moves on existing authority.