Derivatives Regulation Meets Crypto: CFTC's Advance Notice

The Commodity Futures Trading Commission has been asked for years to say how it would regulate retail crypto trading. On October 5, 2026, it began to answer, publishing an advance notice of proposed rulemaking, or ANPRM, built on a provision of the Commodity Exchange Act that has mostly served enforcement until now. Chairman Michael Selig called it a critical step in keeping America the crypto capital of the world and said the public deserves clarity, certainty and consumer protections.

The statutory hook

The notice rests on Section 2(c)(2)(D) of the Commodity Exchange Act, which covers retail commodity transactions offered with leverage, margin or similar financing. Unless an exception applies, those transactions must take place on or under the rules of a designated contract market. The CFTC proposes to use that authority to write rules for what it calls crypto asset transactions, or CTXs, under two headings: Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM).

The notice defines a crypto asset as a digital representation of value recorded on a cryptographically secured distributed ledger, and excludes payment stablecoins from permitted issuers under the GENIUS Act. It argues that a uniform federal framework is needed because state money transmission laws do not adequately protect retail customers, pointing to losses at FTX, Voyager and BlockFi and to one platform offering leverage of up to 100 to 1.

Two regulations, two jobs

Regulation CTX is about what is covered. It interprets “offer” and “actual delivery” for crypto assets. An offer made through ordinary onboarding, exchange or margin documents could reach every transaction in an account, including fully paid trades. Actual delivery would require that the customer have meaningful possession and control, potentially including private keys, and after delivery only the CFTC’s anti-fraud and anti-manipulation authority would apply.

Regulation CAM is about where trading happens. It would create a subcategory of designated contract market that lists only CTXs and lists the crypto asset itself, not a contract that references it. A crypto asset market would have to meet the 23 core principles for exchanges, adapted for the asset class. The notice floats four listing factors: circulating supply, control of the blockchain, open-source code and network resilience. Existing exchanges could add CTXs under their current registrations, and perpetuals and other derivatives would stay under the current framework, outside this notice.

Intermediation is the heavier lift. Under the notice, all CTXs would have to go through a futures commission merchant, possibly in a limited-purpose category, with segregation, net capital, NFA membership and anti-money-laundering obligations, and leverage could come only from such a firm or a bank it sponsors. Positions would clear through a derivatives clearing organization, and the notice asks whether a limited guaranty could replace full novation for leveraged positions.

A long list of questions

Because this is an ANPRM, the document asks more than it decides. Its questions cover offers, delivery, listing standards, surveillance, position limits, trade execution, proof of reserves, margin, intermediation, clearing and eligible assets. The margin questions include whether the Commission should set margin directly or delegate it. Custody is unsettled, particularly segregation of fully paid assets and rehypothecation. The CFTC invites answers from state-regulated exchanges, exchanges registered with it, intermediaries, banks, technology firms, trade associations and investors.

Nothing binds anyone yet. Comments are due 60 days after the notice appears in the Federal Register and will be posted on Regulations.gov, and the Commission says it will use them to inform possible future action, such as a rulemaking.

What to watch

The sharpest dispute is likely to be the reading of “offer,” because it could bring an exchange’s whole book of customers under federal oversight and raises the question of whether a spot-only path under state law stays viable. State preemption is a second fault line. A third is how the agency treats its own reach, since an interpretation adopted now could be narrowed by a later Commission. The comment record will show whether exchanges, brokers and consumer advocates agree on any of it.