CFTC Chairman Michael Selig: The Commission is Using Existing Legal Authority to Establish a Regulatory Market Structure for Crypto Assets
Michael Selig, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), stated that the Commission is utilizing its existing legal authority to establish a regulatory market structure for crypto assets, declaring that "it’s go time."
This is not a new law from Congress, but rather an administrative legislative approach following the Senate's procedural vote that failed to advance the CLARITY Act. On September 17, the Commission submitted a draft titled "Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets" to the Office of Information and Regulatory Affairs at the White House Office of Management and Budget for review, registration number 3038-AF80, which is currently in the pre-rule stage, with the text not yet publicly available. The review under Executive Order 12866 has a limit of about 90 days.
In August, Selig instructed staff at the Innovation Committee to compile a market structure using existing authority, envisioning a new category of crypto asset market similar to designated contract markets, allowing registered and some unregistered exchanges to offer leveraged or margin crypto trading under the Commission's oversight. The path also includes providing compliance channels for protocol developers. The Commission is simultaneously advancing the launch of spot crypto on designated contract markets, tokenized collateral, and stablecoins entering derivatives margin.
Supporting actions have been initiated: a joint explanation with the SEC designating Bitcoin, Ethereum, Solana, XRP, Cardano, etc., as digital commodities rather than securities; launching pilot programs for Bitcoin, Ethereum, and USDC as derivatives margin and issuing no-action letters; approving perpetual contracts as a pathway for futures, leading to a lawsuit from CME; and creating separate rulemaking for prediction markets and event contracts. The GENIUS Act has provided a federal framework for payment stablecoins, while the comprehensive market structure bill remains stalled in Congress.
Selig stated that the White House has committed to clear rules, and after Congressional delays, the agency will no longer wait. He advocates that most crypto assets should be regulated as commodities rather than securities to avoid pushing trading overseas through enforcement instead of legislation. The goal for spot trading was previously included in the 12-month Crypto Sprint by former acting chair Caroline Pham, requiring the presence of spot crypto trading on designated contract markets by the end of the year.
In market mechanics, buyers are paying a premium for compliant exchange and broker licenses, while sellers are benefiting from regulatory arbitrage opportunities in offshore platforms and unregistered leveraged trading. Funds are shifting from gray market spot and perpetual trading to regulated channels accessible to futures commission merchants, clearinghouses, and tokenized treasury collateral. Beneficiaries include Bitnomial and CME system participants with existing DCM and DCO licenses, as well as futures merchants able to accept USDC margin; pressured parties include offshore exchanges unable or unwilling to comply with designated market standards for segregation, reporting, and customer protection, as well as the old enforcement narrative that treats all tokens as securities. The event-driven factor is the administrative response following the failure of Congressional bills.
The draft will only enter formal proposal and public comment after passing White House review, with the rule text, economic significance determination, and final effective date not yet locked in. Submission itself does not equate to rules being in effect.
Source: Public Information
ABAB AI Insight
The Commodity Futures Trading Commission has shifted from competing for jurisdiction with the SEC during Gensler's era to Selig using existing commodity law to write market structure. This is not a sudden enlightenment, but a backup engine after the CLARITY Act fell short by one vote in the Senate. U.S. derivatives regulation has historically relied on two layers of licensing: designated contract markets and futures commission merchants; fitting spot crypto into the same mold effectively uses futures law to cover spot leverage. Bitnomial has already opened the spot market through self-certification, while CME is suing the Commission over treating perpetual contracts as futures, indicating that "clarity" will still face another round in court.
The capital path is expanding margin from cash and treasury to Bitcoin, Ethereum, and USDC, and further to tokenized treasuries. Those who can access segregated accounts and clearinghouses can turn on-chain assets into derivatives collateral. Agencies want U.S. clearing, U.S. reporting, and U.S. customer protection, trading licenses for scale. Offshore platforms that cannot become crypto asset markets will face higher enforcement and banking channel costs for leveraged trading. Stablecoins follow the GENIUS Act, commodities follow the Commission, and securities follow the SEC, with funds flowing by classification rather than by slogan.
The analogy is the post-2000 Commodity Futures Modernization Act standardizing energy and financial futures, and the 2010 Dodd-Frank Act pushing swaps into clearinghouses. The industry phase is shifting from "enforcement equals regulation" to "first obtain a license, then write the details." The UK's FCA and the EU's MiCA have provided operational frameworks; if the U.S. continues to rely solely on litigation, dollar-denominated spot and perpetual trading will remain booked overseas. The Commission is proactively writing rules to prevent the market structure from being absorbed by the SEC's definition of securities once the legislative window closes.
The structural judgment is that regulatory changes are compounded by the transfer of pricing power. The mechanism of regulatory change is that Congressional legislative failure does not eliminate the existing power of commodity law over leveraged retail trading; agencies are turning power into executable text through pre-rule and White House review. Pricing power shifts from a binary bet of "whether it is illegal" to "who gets designated as a crypto asset market and who can use stablecoins for margin." Clear rules reduce the uncertainty of license premiums while raising the compliance cost threshold. "Go time" refers to the administrative clock starting, not that the market has already changed tracks.
ABAB News · Cognitive Law
When a bill dies in Congress, rules often shift to the administrative door.
Clarity does not eliminate regulation; it shifts arbitrage from gray areas to licensed ones.
Whoever defines collateral first will take the clearing rights of the leveraged market.