In remarks in New York, US Commodity Futures Trading Commission Chairman Michael Selig outlined the agency’s newly issued advance notice of proposed rulemaking on crypto asset transactions and markets. The framework would create an optional federal route for exchanges offering retail customers margined, leveraged or financed crypto asset transactions under existing Commodity Exchange Act authority, advancing the crypto market work pursued through Project Crypto. Ordinary spot exchanges would not be compelled to register, while platforms offering these leveraged retail transactions are already subject to CFTC registration requirements. Existing designated contract markets could offer these transactions under tailored rules. Other platforms could register as an ordinary designated contract market or as a crypto asset market, a proposed subcategory for venues that offer only retail crypto asset transactions. Crypto asset markets would apply designated contract market core principles through crypto specific requirements covering manipulation risks in asset listings, market surveillance, customer funds, conflicts of interest and system safeguards. The framework also contemplates proof of reserves for customer property held in omnibus accounts, while venues offering futures, options or swaps would remain under the existing designated contract market regime. The framework would require futures commission merchant intermediation, bringing customer accounts and funds within disclosure, capital, segregation and Bank Secrecy Act requirements. It would also clarify that transferring a crypto asset to a user’s external, noncustodial wallet within 28 days generally meets the actual delivery exception. Separately, staff are examining regulatory treatment for software developers that do not solicit orders, control execution or hold customer assets, as well as lawful pathways for onchain products.

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