The Commodity Futures Trading Commission (CFTC) is weighing rules for retail crypto trades involving margin, leverage or financing, with a possible federal registration path for exchanges and customer asset protections still under consideration.
The agency has issued an advance notice of proposed rulemaking to gather input before drafting requirements. One part of the framework, Regulation Crypto Asset Transactions (Reg CTX), concerns trades for which retail customers are offered margin, leverage or financing. The notice seeks views on who should set margin requirements and decide which assets can serve as collateral.
In an interview with Bankless released Oct. 19, CFTC Chair Michael S. Selig described one possible approach: exchanges could develop margin methods in consultation with CFTC staff. The notice also leaves open whether clearing organizations or the commission should set margin and eligible collateral rules.
Selig illustrated a potential trade with a customer using Ether (ETH) or Solana (SOL) already held in an account as collateral to buy Bitcoin (BTC). If Bitcoin’s price fell, the customer could be asked to provide more collateral, he said. His example does not establish which assets would qualify under any eventual rule.
Selig said comparable crypto perpetuals and other futures products he discussed had reached leverage of about seven times. He did not present that figure as a proposed limit for spot trades.
Another part of the framework, Regulation Crypto Asset Markets (Reg CAM), contemplates a tailored CFTC registration category for exchanges offering only the covered transactions. Selig cited fragmented state licensing as a reason to consider a federal route.
Exchanges that do not offer retail margin, leverage or financing would continue under state licensing. The distinction depends on what an exchange offers, even if a customer chooses not to use those features.
The CFTC’s notice points to past failures involving customer assets as it seeks input on safeguards. Comments must be received by Dec. 14. The agency has set no date for final rules.
