The US Commodity Futures Trading Commission (CFTC) has put forward a new federal framework for crypto exchanges that offer leveraged trading to retail customers. The move could give US crypto platforms a clearer route to federal oversight at a time when the country still lacks a comprehensive crypto market law. For readers unfamiliar with the agency, the CFTC polices US derivatives markets under the Commodity Exchange Act (CEA), the statute Selig cited when describing the framework's goals.

CFTC Chairman Michael S. Selig announced the proposals on October 5 during remarks at the Fordham Law Blockchain Regulatory Symposium in New York. The agency is seeking public input on two related proposals: Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM).

A Federal Option, Not a Mandate

Under the framework, registration with the CFTC would function as a federal alternative rather than an automatic requirement. Platforms would not be forced into the CFTC system and could continue operating under state licenses if their business model allows it. The choice would rest with each company, depending on how it is structured. However, exchanges offering certain types of leveraged crypto trading already fall under CFTC registration requirements under existing law. That mix of state-level licensing for spot activity coexisting with federal registration for some leveraged products is the regulatory backdrop these proposals land on.

A Three-Tier Market Structure

The CFTC outlined the crypto market through a three-level structure that maps regulatory obligations to the type of activity a platform conducts:

• Ordinary spot exchanges would remain largely under state money transmission rules, while the CFTC would retain anti-fraud and anti-manipulation authority.
• Exchanges offering retail margin, leveraged, or financed crypto trading would fall into the second category.
• Platforms offering derivatives such as perpetual contracts — derivative positions with no expiration date — would sit in the third category.

The new proposals mainly target that second group. Under the plan, exchanges that want to offer only leveraged crypto transactions could register as a new type of derivatives exchange called a crypto asset market (CAM). Existing CFTC-registered derivatives exchanges could also offer these products under the proposed rules. That would give leveraged-only platforms a registration category designed around their specific offering.

Customer Protections and Safeguards

The framework would bring several customer protections into the picture. CAMs could face requirements covering market surveillance, financial safeguards, and the handling of customer funds. The CFTC is also considering proof-of-reserves rules for exchanges holding customer assets in omnibus accounts — pooled accounts in which a platform holds many customers' assets together rather than keeping each customer's holdings separate. Proof-of-reserves arrangements are meant to let a platform demonstrate it actually holds the assets it owes customers.

Another major component involves futures commission merchants (FCMs). These firms would handle customer accounts and funds and would be required to follow existing customer protection requirements. Their involvement would also bring anti-money laundering and customer identification rules into the process.

The CFTC is additionally examining how the rules could work with self-custody. Under the proposal, crypto assets sent to a customer's external wallet within 28 days could generally meet the agency's interpretation of "actual delivery" — a CEA standard used to determine when retail leveraged transactions fall under the agency's requirements.

Selig said the framework marks an important step:

"The framework I have outlined is an important step towards bringing crypto asset markets within the protections of the CEA. It will establish clear rules of the road for firms that want to serve American customers, strengthen the integrity of these markets, and provide a path for responsible innovation to take place here in America."

On Onchain Finance

Selig also pointed to the agency's wider interest in onchain finance. He said developers who simply publish software and do not control trades or hold customer assets should not automatically be treated like traditional intermediaries.

The proposal does not, on its own, create a full federal crypto regime. Congress would still have to decide whether all exchanges should be required to register federally. In the meantime, the CFTC is accepting public comment as it develops the proposals further. At this stage, definitions, thresholds, and obligations can still be revised before any final rules are set — making the comment process, along with Congress's decision on mandatory registration, the two threads most likely to shape how the framework ultimately looks.