CFTC Latest Advance Proposed Rule Notifies Proposed Use of Existing Authority to Establish Crypto Spot Market Framework

PANews, Oct. 6 (Xinhua) -- The latest Advance Notice of Proposed Rules (ANPRM) issued by the U.S. Commodity Futures Trading Commission (CFTC) seeks to use its existing authority to establish a crypto market structure framework for spot trading, according to crypto journalist Eleanor Terrett. The framework will build on existing DCM, DCO and FCM registrations and create a new category of “crypto asset markets.” One notable difference from the Clarity Act is that the CFTC proposal is exploring a voluntary path to federal exchange registration: spot exchanges that do not provide leverage could opt out of the framework and keep their state currency transfer licenses.

PANews October 6 news, according to crypto journalist Eleanor Terrett, the U.S. Commodity Futures Trading Commission (CFTC)'s latest Advance Notice of Proposed Rulemaking (ANPRM) seeks to use its existing authority to establish a crypto market structure framework for spot trading. The framework would build on existing DCM, DCO, and FCM registrations and create a new category of "crypto asset market." One notable difference from the Clarity Act is that the CFTC proposal is exploring a voluntary federal exchange registration path: spot exchanges that do not offer leverage could choose not to join the framework and continue to retain state money transmitter licenses. Former CFTC Chairman Giancarlo said this provides exchanges with a "clear, voluntary single federal rulebook path" when customers trade using borrowed funds, and said the CFTC is acting within the authority granted by Congress in 2010 and supported by court rulings recognizing assets such as Bitcoin as commodities.

Multiple lawyers said the ANPRM is a "clever" or "creative" interpretation of Section 2(c)(2)(D) of the Commodity Exchange Act and could cover retail crypto spot trading that provides leverage, margin, or financing, even if customers do not actually use leverage. The proposal also addresses "actual delivery" under Section 2(c)(2)(D), and appears to focus on whether customers own/control the assets rather than relying only on book entries in an omnibus account. However, the proposal still leaves major questions regarding bankruptcy protection for customer assets. Comments must be submitted within 60 days after the proposal is published in the Federal Register.