CFTC submits crypto market structure proposal for White House review

The Commodity Futures Trading Commission (CFTC) is moving to establish crypto market rules without waiting for Congress.

The agency submitted a proposed framework covering crypto asset transactions and markets to the White House’s Office of Management and Budget (OMB). Federal records show OMB received the CFTC proposal on Sept. 17.

CFTC Chairman Michael Selig said in August that the agency was preparing an innovation agenda covering crypto assets, AI-related compute markets and prediction markets, stating that clear federal rules are necessary to keep financial innovation in the US.

Selig noted that CFTC staff were working on rules under existing CFTC authorities that could create a new category of “crypto asset market” for eligible exchanges and permit crypto trading on a leveraged or margined basis.

“I’ve directed the CFTC staff to begin exploring rules to codify a CFTC market structure for crypto assets using the agency’s existing authorities,” he said, speaking at the Innovation Advisory Committee’s inaugural meeting. “This could enable current registrants as well as non-registrant crypto exchanges to be designated by the CFTC as a type of DCM known as a crypto asset market and offer crypto asset trading on a leveraged or margined basis subject to purpose-fit rules under the CFTC’s regulatory oversight.”

The proposal remains subject to OMB review and potential revisions before returning to the CFTC for a vote. If approved, the agency would seek public comments before drafting a final rule, which would also require commission approval before taking effect.

The CFTC is advancing its own crypto market-structure framework as the US Senate has failed to move forward with the CLARITY Act.

This comes after the SEC on Thursday approved a five-year conditional exemption for certain blockchain-based platforms to facilitate tokenized securities trading through automated market makers and liquidity pools without registering as exchanges.

The CFTC has also extended no-action relief to qualifying providers of passive trading software. The relief allows them to connect users to regulated derivatives markets without registering as introducing brokers, provided they meet the agency’s conditions.

The framework could apply to crypto wallets and other trading interfaces offering access to regulated derivatives, including perpetual contracts and event contracts.