The U.S. Commodity Futures Trading Commission has started preparing new rules for leveraged and margined crypto transactions. CFTC Chairman Michael Selig instructed agency staff to use their existing statutory authority to develop a framework governing the market structure.
The new rules will cover products offered by CFTC-registered entities. They could also create a legal pathway for some crypto platforms that are not currently registered with the agency to offer leveraged transactions off-exchange.
However, the CFTC has not granted these platforms blanket approval. Off-exchange transactions will need to meet the “actual delivery” conditions established by the agency.
CFTC will move without waiting for Congress
Selig made the announcement during the first meeting of the CFTC Innovation Advisory Committee on August 20. The meeting’s agenda included crypto asset regulation, artificial intelligence and prediction markets.
The CFTC chairman said Congress must pass the CLARITY Act to establish comprehensive rules for the crypto market. However, the agency will not wait for the legislative process to conclude.
Selig delivered a similar message at the White House one day earlier. He said the CFTC would use every available tool until lawmakers finalize the bill.
This approach does not mean the agency will expand its authority over crypto without new legislation. Instead, the CFTC will prepare rules within the boundaries of its existing powers under the Commodity Exchange Act.
How could unregistered crypto exchanges qualify?
Leveraged, margined or financed commodity transactions offered to U.S. retail investors generally fall under CFTC rules. Many of these transactions must take place on registered markets because they qualify as futures transactions.
The law includes an exemption known as “actual delivery.” When a transaction meets the conditions of this exemption, a platform may offer the product outside a CFTC-registered futures exchange.
The CFTC will now draft rules explaining how the exemption applies to crypto assets. The framework could clarify when and how an asset must reach the customer, when the customer gains control over it and what role the platform can play in custody.
The initiative does not mean every unregistered crypto exchange will be free to offer leverage in the United States. Platforms will need to structure their transactions in accordance with the actual delivery exemption and meet the safeguards established by the CFTC.
Registered exchanges will face separate standards
Selig also asked staff to prepare rules for CFTC-registered designated contract markets. These entities, known as DCMs, can list futures and derivatives under the agency’s supervision.
The CFTC will consolidate the requirements that existing DCMs must follow when offering leveraged or margined spot crypto transactions. According to Selig, this step will establish consistent protection and transparency standards across different platforms.
The agency is also considering a new DCM registration category for leveraged crypto transactions aimed at retail investors. This could allow crypto platforms to apply for a registration model tailored to their activities instead of adopting every rule originally designed for traditional derivatives exchanges.
Selig first introduced the plan in January as part of the Project Crypto framework. His latest instruction indicates that the agency has moved into the rule-drafting phase.
New rules could reshape the U.S. crypto market
Once completed, the regulations could provide crypto platforms operating in the United States with a clearer legal pathway for leveraged spot products. The CFTC argues that regulatory uncertainty has pushed much of this activity toward offshore platforms.
The new framework could also introduce common standards covering customer asset protection, risk disclosures and market surveillance. Such rules are particularly important for retail investors because leverage can magnify both gains and losses.
The CFTC has not yet disclosed the draft text, leverage limits or implementation schedule. The agency is expected to publish its proposal for public comment before completing the formal rulemaking process.
