The Commodity Futures Trading Commission’s new proposal would leave most self-custodied and on-chain crypto trading outside federal oversight, even as it pulls leveraged exchange trading under the agency’s rules.
The CFTC on Monday published an advance notice of proposed rulemaking laying out two frameworks, Regulation CTX and Regulation CAM, in the agency’s own announcement. The notice is an early step that seeks public input before formal rules are drafted, and the public would have 60 days to comment once it appears in the Federal Register, which had not happened as of the announcement.
The carve-out for self-custody comes through the proposal’s “actual delivery” test. Under Regulation CTX, an exchange that offers leverage, even through routine terms of service, could see fully paid trades fall under CFTC watch when the purchased crypto sits on the exchange’s own books. The trades escape federal oversight only through actual delivery, and the CFTC suggests that could mean customers holding their own private keys. That standard is a preliminary suggestion, not settled policy. On-chain trading protocols that send tokens straight to a user’s wallet would usually clear the bar, according to the notice, which means DeFi venues generally stay outside the framework as proposed.
The notice also changes the agency’s posture toward DeFi directly. It describes the CFTC’s Biden-era cases against Kraken, Ooki DAO and Uniswap as “regulation by enforcement”, stepping back from the enforcement-led approach of the past few years.
There is a second lane too. Exchanges that do not offer leverage at all could keep operating under state money transmitter licenses rather than register with the CFTC, so the federal framework would bite mainly on custodial platforms that also lend or margin. For those venues, Regulation CAM would create a “crypto asset market” license, a tailored version of the designated contract market status futures exchanges hold, with trades routed through futures commission merchants and leverage coming only from those brokers or banks they sponsor.
CFTC Chairman Michael Selig said the rules are “designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX.” The agency is also weighing proof-of-reserves requirements and standards against listing tokens prone to manipulation, neither of which is decided.
The proposal follows the Clarity Act’s failure in the Senate in September; Selig had said in August that the agency would write its own crypto rules if Congress came up short.
