Securities Regulation Daily Wrap Up, BLOCKCHAIN—CFTC seeks comment on proposed rules governing crypto transactions and markets in advanced notice, (Oct 6, 2026)

By Rebecca E. Hoffman, J.D.

Comments are due 60 days after the notice is published in the Federal Register.

The CFTC announced its advanced notice of proposed rulemaking pertaining to “Regulation CTX” (crypto asset transactions) and “Regulation CAM” (crypto asset markets), seeking public comment on the specifics in its attempt to develop rules implementing CEA Section 2(c)(2)(D) in the context of crypto assets. The “fit for purpose” rules will be aimed at protecting the public from fraudulent schemes without regulating “by enforcement,” and are intended to provide a framework for conducting CTXs lawfully.

“‘The American people deserve clarity, certainty, and consumer protections in the crypto asset markets and the agency is committed to delivering this by incorporating crypto asset transactions into its uniform national market regulatory framework,’” CFTC chair Michael S. Selig said in the press release. “‘[T]he Commission will take every necessary step to establish regulations that are designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX.’”

In August, at the first meeting of the CFTC’s Innovation Advisory Committee, a group representing every corner of both traditional and modern financial markets wondered aloud how it might be possible to bring crypto asset trading under the federal umbrella, the notice recounted. The industry leaders expressed their wish for progress toward regulatory clarification.

2(c)(2)(D). The advanced notice provides a comprehensive history of events and changes in the financial landscape that have led to this point. Congress included a provision in the Dodd-Frank Act adding Section 2(c)(2)(D) to the CEA, providing that certain retail leveraged or margined commodity transactions are subject to certain enumerated provisions of the CEA “as if they were” futures contracts, unless an exception applies.

The “on-exchange requirement” is a provision requiring these retail leveraged commodity transactions to be conducted on or subject to the rules of a designated contract market (DCM). “The resulting uncertainty amongst market participants as to how to comply with, among other obligations, the on-exchange requirement, has stymied Congress’s intent to bring retail commodity transactions, including CTXs, onto DCMs and under the Act’s uniform federal market regulatory regime applicable to futures contracts,” the Commission explained.

Market participants attempting to follow myriad state regulations are met with confusion, complexity, inefficiency, and risk. The proposal notes that the CEA is designed to protect market participants from fraud, manipulation, and other abuses, and protect market integrity, and does so much more effectively than the multi-jurisdictional framework under which crypto asset customers have had to operate.

The President’s Working Group on Digital Asset Markets addressed this by directing the CFTC to determine how best to bring CTXs into the fold and beef up regulations to secure their place. The Commission is now seeking to “explicitly identify certain transactions involving crypto assets that it preliminarily understands to be subject to section 2(c)(2)(D)” and to “tailor” on-exchange futures requirements to the particular issues presented by CTXs.

Requiring CFTC registration is likely to go a long way to combat abusive practices inherent in crypto asset markets, the notice observed. An illustration of this is the FTX scheme: the bankrupt FTX entities had been rife with segregation and security issues, but “the customer property held by CFTC-registered FTX entities ‘remained exactly where it should be, segregated and secure. This is regulation working,’” the proposal said, quoting former CFTC chair Rostin Behnam’s Senate testimony regarding FTX.

CTX and CAM. Regulation CTX will ideally clarify under what circumstances an offer is covered by 2(c)(2)(D). The Commission suggested it applies to all offers of leveraged, margined, or financed agreements, contracts, or transactions, even if no transaction results, and “a covered offer could also be made with respect to all transactions available on an exchange … through a customer account … or in a product class.”

Regulation CAM would create a “purpose built regulatory framework” for entities involved in CTXs that accommodates “the commercial realities of, and risks posed by, CTXs.” Integrated models, which combine multiple market functions, such as trading, custody, and clearing, within a single crypto platform or affiliated group, may “deliver superior outcomes,” the CFTC said, and thus this proposed regulation would contemplate CAMs registering as required for those functions, and modify the existing framework to better fit the integrated model. The proposal also contemplates FCM intermediation of all CTXs, and thus a CAM could register, or integrate with, an FCM.

Furthermore, the Commission asks commenters to provide their views on its preliminary interpretation that a fully paid, open CTX remains subject to the CEA’s regulatory requirements applicable to on-exchange futures unless an exception applies, since the proceeds of such a transaction are constructively, but not actually, delivered. “Actual delivery” generally means that the asset is transferred to the purchaser’s possession, which can exempt certain transactions from CFTC oversight, but the Commission also preliminarily concluded that many on-chain protocols may result in “actual delivery” because purchasers obtain possession and control of the purchased crypto assets. The proposal asks for comment on the scope of “actual delivery,” as well as any alternative CTX structures.

There is guidance for DCMs to avoid the likelihood of manipulation when creating a derivative contract, and the Commission seeks comment on such guidance for CAMs as well. CAM core principles can be modeled after DCM core principles, and the Commission is asking for comment on that process. “For example, certain markets in crypto asset may be inherently more transparent than traditional derivatives markets because of the public and transparent nature of public blockchains systems, which may make available trade information and data,” the proposal noted. “Under what circumstances could such data be sufficient to monitor trading in crypto asset markets?” And what differences are there between execution methods? The Commission also asked whether margin requirements should be more stringent for CTXs.

Comments must be received on or before 60 days beyond Federal Register publication of the advanced notice.

MainStory: TopStory Blockchain CommodityFutures Derivatives Enforcement ExchangesMarketRegulation FinancialIntermediaries GCNNews