The U.S. Commodity Futures Trading Commission has published an advance notice of proposed rulemaking outlining two linked frameworks: Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM), which would allow crypto exchanges to register as a new type of federally regulated "crypto asset market."

Under the agency's preliminary reading, merely offering leverage could bring even fully paid trades under CFTC oversight unless customers take actual delivery of their crypto. The public will have 60 days to comment once the notice appears in the Federal Register, so the clock has yet to start. Exchanges that do not offer leverage could continue operating under state licenses.

The CFTC wants to give crypto exchanges a federal home, and leverage is the key that unlocks the door. The agency is pressing ahead with rulemaking proposals following the collapse of the Clarity Act, the legislation that would have established the ground rules for most cryptocurrency activity in the United States but fell short in the Senate last month. The CFTC published the advance notice on Monday, an early procedural step that seeks public input before formal rules are drafted.

The 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.

Under Regulation CTX, the CFTC reads that rule broadly. 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 in the customer's own wallet. Those trades escape federal oversight only through "actual delivery," which the CFTC suggests could require customers to hold their private keys. On-chain trading protocols, which typically send tokens straight to users' wallets, would usually clear that bar, the agency said.

Regulation CAM would create a "crypto asset market" license, a tailored version of the designated contract market status held by futures exchanges. Trades would run through futures commission merchants, brokers subject to anti-money laundering rules, and leverage could come only from those brokers or the banks they sponsor. Exchanges could also register as their own broker and clearinghouse.

The CFTC is weighing proof-of-reserves requirements and standards against listing tokens prone to manipulation — both of which remain open questions as the agency gathers input. Exchanges that do not offer leverage could keep operating under state money transmitter licenses.

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. Selig had said in August that the agency would write its own crypto rules if Congress came up short. The CFTC has also sent the White House new prediction market rules. For the crypto framework, White House clearance and Federal Register publication are the procedural milestones to watch before the 60-day comment period opens and any formal proposal takes shape.

The Securities and Exchange Commission has moved on a parallel track, proposing Regulation Crypto Assets in August and unveiling an innovation exemption for tokenized stocks last month.