CFTC Submits Crypto Trading Market Proposal to the White House
The U.S. Commodity Futures Trading Commission has submitted a regulatory draft covering crypto asset trading and the crypto asset market for review by the White House, fulfilling its commitment to quickly establish rules after legislative obstacles in Congress.
The Office of Information and Regulatory Affairs under the Office of Management and Budget announced on Friday that the document was received on Thursday, titled "Regulation of Crypto Asset Trading and Crypto Asset Market Regulation." It is currently in the pre-rule stage, and the text has not yet been made public. The review window typically lasts up to 90 days, and after approval, it still requires a vote by the Commission, public solicitation of opinions, and a second vote to take effect.
This move follows the Senate's failure to advance the "Clarity Act" this week with a vote of 49-50. The bill was originally intended to establish the Commodity Futures Trading Commission as the primary federal regulator of the crypto market and delineate its boundaries with the Securities and Exchange Commission; after the bill stalled, Chairman Michael Selig had previously instructed staff to draft a framework under existing statutory authority, allowing existing registered entities and unregistered crypto exchanges to apply to become designated contract markets for crypto trading on a leveraged or margin basis.
At the same time, the Commission provided non-action relief to passive software service providers that do not custody customer assets and only connect with regulated entities, allowing them to avoid registering as introducing brokers; the Securities and Exchange Commission separately introduced a conditional innovation exemption for tokenized stock platforms for up to five years. Both agencies stated that they would advance rules within existing authorizations, regardless of new legislation.
Details of the draft remain confidential, including which tokens are covered, the admission criteria for exchanges, leverage limits, and whether jurisdiction extends to spot markets or is limited to derivatives, which have not been disclosed. The Chairman previously also requested staff to clarify when retail crypto commodity trading can occur off-exchange under the "actual delivery" exception and to regulate the listing of such trades on designated contract markets on existing platforms.
Mechanically, this represents a shift in regulatory approach following legislative failure: selling is the "one-time licensing by Congress," while buying is the "administrative review calendar replacing the Senate agenda." Funding is shifting from betting on the passage of written law to trading and wallet infrastructure that can access designated contract markets and provide leverage or passive software entry; the beneficiaries are licensed futures exchanges and the software layer that can access regulated channels, while the pressured parties are unregistered platforms that continue to bet compliance entirely on a single market structure law.
The White House review itself does not constitute effective rules; it merely rewrites the timeline for crypto market structure from Congress's session to the review clock of Executive Order 12866.
Source: Public Information
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The Commodity Futures Trading Commission's path on crypto over the past decade has involved first using enforcement and verbal jurisdiction to contest the boundaries between spot and derivatives, then shifting to pilot programs and non-action letters during the Trump administration: allowing Bitcoin, Ethereum, and USDC as collateral for derivatives, opening up registered futures exchanges to list spot crypto, and giving leeway to wallet technology service providers. Michael Selig had already indicated at the August Innovation Advisory Committee that if the bill stalled, existing authority would be used to write the "crypto asset market" as a variant of designated contract markets; this submission for review is merely turning that forecast into an administrative process.
Capital and licensing resources are shifting from "waiting for Congress to decentralize" to "first entering White House review and then switching to on-exchange leverage." Designated contract market licenses, futures commission merchant accounts, and passive software non-action letters constitute a set of pipelines that can immediately connect to traditional clearing and margin; unregistered exchanges wishing to continue leveraging can only apply to be designated as crypto asset markets or direct traffic to registered platforms. The motivation is to lock in the on-exchange path with administrative rules before the midterm election window closes, avoiding spot liquidity from continuing to remain overseas or in state law gaps.
A historical comparison is the 1980s Shad-Johnson Agreement: the SEC and CFTC first used inter-agency agreements to split jurisdiction over stock index futures, years later codified into law. Today's five-year exemption for tokenized stocks and the pre-rule for the crypto asset market are part of the same "first write administrative text, then wait for Congress to ratify" division of labor. The industry phase has shifted from expansion narrative to control channels: who can become a designated market, who can introduce without a license, determines where leverage and prediction contracts can grow.
This represents a regulatory change. The mechanism is that the legislative threshold is higher than administrative review: texts that cannot pass with 60 votes can be initiated with a 90-day review and a Commission vote. As the rule-making authority shifts from the Senate calendar to the Office of Management and Budget and the offices of the two congressional leaders, the pricing power also shifts from "whether the bill passes" to "who gets on-exchange leverage and tokenized exemptions first."
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- Bills that cannot pass will shift to the review clock.
- Licensing gaps will be filled with pre-rules, not by relying on votes.
- Leverage will first flow to registered tracks.