CFTC sketches a federal path for crypto trading
- Mike Selig proposed an optional federal framework for crypto exchanges, alongside rules for retail spot trading with borrowed funds.
- The proposals could replace state-by-state licensing for participating platforms, but they are not final rules.
Crypto exchanges could get a federal alternative to state-by-state licensing, and US customers could trade spot crypto with borrowed money, under proposals described by CFTC Chair Mike Selig on Bankless. The plan would give platforms a choice: stay under state rules or register federally under a common standard.
Selig said state money-transmitter licenses grew out of the regulatory response to Mt. Gox, but they do not provide a unified framework for spot crypto markets. His proposed Regulation CAM would create an optional federal route for exchanges. A second proposal, Regulation CTX, would let registered platforms offer retail customers spot trading on margin: borrowing against crypto holdings to trade.
That financing could let customers pledge assets such as ETH or SOL as collateral for Bitcoin trades. Selig’s proposals would also separate the customer-facing brokerage, exchange and clearinghouse functions, with customer funds segregated from exchange operations and proprietary trading. Those divisions are intended to limit conflicts and protect customers; they do not eliminate the risks of borrowing to trade.
The plan is a more concrete step toward US oversight than the market’s earlier push to bring on-chain derivatives onshore. On Forward Guidance, Robinhood’s crypto chief said the company was seeking CFTC and SEC alignment, while Lighter founder Vlad described working with Selig on US perpetual contracts. Bankless’s account of the new proposals sets out a possible federal structure for some of that activity.
The federal route would be optional, not an immediate end to state licensing. Selig said firms could remain under state regimes, while the CFTC gathers comments before deciding on final rules. For traders, the potential shift is broader access to federally regulated platforms and borrowed-capital products; how the rules would work in practice remains unsettled.
Source Intelligence
- Deep dive into what was said in the episodes
The CFTC’s Proposed Rules to Reshape US Crypto Markets | CFTC Chair Mike Selig • Oct 19
- Mike Selig says the CFTC has moved crypto perpetuals onshore, proposed its first crypto exchange rules, and expanded oversight of prediction markets; he also says the agency is easing some post-financial-crisis rules he considers excessive.
- Selig argues national markets need federal rules for consistent disclosure, fraud enforcement, and customer protections across state lines. He says US commodity derivatives total $1.2 quadrillion in notional value, with the United States accounting for about 50%.
- Selig says spot crypto exchange licensing mostly sits with states under money-transmitter laws adopted after the Mt. Gox collapse. Those licenses provide basic payment and anti-money-laundering controls, but did not prevent FTX or ensure customer-fund segregation and market-abuse protections.
- Selig says the CFTC declared Bitcoin a commodity in 2014 and later treated Ether and other crypto assets as commodities, giving it anti-fraud and anti-manipulation authority. FinCEN handles money-laundering rules, OFAC handles sanctions, and states generally license spot exchanges.
- Selig describes a joint SEC-CFTC framework that separates network-based digital commodities, collectibles, digital tools, stablecoins, and digital securities. The SEC’s proposed Red Crypto regime would address token fundraising and distributions, while the CFTC rules would govern eligible tokens’ trading markets.
- Regulation CTX would let US retail customers trade eligible spot crypto with margin, leverage, or financing, an offering Selig says state licensing regimes do not support. The CFTC would define the transactions and set principles-based requirements for exchanges.
- Regulation CAM would create an optional federal route for spot crypto exchanges, avoiding state-by-state licenses for firms that choose it; firms could remain under state regimes if they forgo margin products. Existing CFTC-registered derivatives exchanges could offer CTX products through their current infrastructure.
- Under the proposed margin model, customers could pledge assets such as ETH or SOL as collateral for Bitcoin trades, with exchanges setting margin methods in consultation with CFTC staff. Selig says crypto futures margin has reached about 7x leverage, not as a fixed limit.
- Selig says federal exchange rules separate the customer-facing broker, order-book exchange, and clearinghouse, even when firms share a parent company. The CFTC is also proposing stronger vertical-integration conflict rules, including safeguards against customer funds being used for affiliated trading or lending.
- Selig says CFTC-regulated platforms could combine crypto spot margin with perpetual futures, options, and traditional futures, while allowing eligible tokenized assets and derivatives positions to serve as collateral. He argues this could put idle or staked assets to work under customer-protection rules.
- Selig traces the CFTC’s retail commodity authority to Dodd-Frank, which brought leveraged retail commodity transactions onto regulated platforms after courts rejected earlier agency claims. He says the agency is gathering comments before proposing final crypto rules; the Clarity Act would have codified a broader federal framework but did not pass.
- Selig says the CFTC wants crypto rules with bipartisan support so a future administration would face political and customer-protection risks if it withdrew them. He urged industry participants to comment on the proposals with specific feedback, whether supportive or critical.
Also discussed on this episode: (4)
Regulation (1)
- Selig says courts have split over state challenges to CFTC-regulated prediction markets, and New Jersey has asked the Supreme Court to review the dispute. He argues event-contract order books are derivatives markets under CFTC authority and need surveillance and protections against manipulation and insider trading.
Payments (1)
- The Near promotion describes near.com as a private, cross-chain interface for crypto, tokenized assets, perpetuals, payments, and yield. It claims support for over 30 chains, $30 billion in cross-chain transfers, five years of mainnet operation without downtime, and 20% trading-fee rebates through the show link.
Stablecoins (1)
- The Ripio promotion describes six local-currency stablecoins, each backed one-to-one by reserves in regulated institutions and available across 10 EVM chains. It says the tokens connect to local payment rails and DeFi platforms, with zero-fee on-ramps and off-ramps and no foreign-exchange conversion.
Agents (1)
- The Bankless promotions describe an MCP that connects AI tools to the publication’s crypto archive and a weekly DeFi Report podcast hosted by Michael Nato. The MCP archive was said to include over 2,000 podcast transcripts and 10,000 articles; the podcast was advertised as 30-minute episodes released Wednesdays.
Robinhood & Lighter: Why Wall Street Is Moving Onchain • Oct 13
- Johann highlights Robinhood's 27 million active US accounts while seeking CFTC and SEC regulatory alignment across all 50 states. The goal is matching native onchain settlement speed without creating degraded US derivative products.
- Vlad notes Lighter works directly with CFTC Chairman Selig to introduce onchain perpetual contracts in the US. Negotiations focus on integrating automatic deleveraging mechanisms into traditional clearing house default cascades.
Also discussed on this episode: (7)
Markets (5)
- Johann states over 70% of Robinhood equity token trading volume occurs outside traditional exchange hours, primarily on weekends and at night. This off-hours demand prompted the company to expand its onchain network capabilities.
- Vlad explains Lighter uses Automated Market Maker mechanics alongside order books to maintain weekend market liquidity. When professional market makers step aside during off-hours news events, AMM pools absorb trading demand at slightly wider spreads.
- Johann contends perpetual futures surpass contracts for difference because transparent order books eliminate broker-favored pricing. Perpetual contracts also allow traders to cross-margin across diverse crypto, commodity, and equity assets.
- Johann notes traders post tokenized equities as collateral on Lighter to fund perpetual positions without selling underlying shares. This strategy avoids triggering capital gains tax events while maintaining market exposure.
- Vlad highlights the complexities of listing pre-IPO perpetual contracts, including uncertain post-offering share counts and potential market resolution standardizations if an IPO gets canceled.
Regulation (1)
- Vlad argues traditional finance perspectives shifted dramatically from treating blockchain as a toy four years ago to active bottom-line engagement today. Institutions and Washington regulators now focus heavily on technical security and low-latency infrastructure.
Stablecoins (1)
- Johann explains Robin Earn yields 7% on dollar balances by converting user funds into stablecoins and lending them onchain via integrated protocols like Morpho.