The Commodity Futures Trading Commission issued an advance notice of proposed rulemaking (Notice) on Oct. 5, 2026, seeking public comments addressing how CFTC might develop a framework for regulating retail crypto asset transactions offered or conducted on a leveraged, margined, or financed basis (retail crypto asset transactions offered on this basis, CTXs). The Notice also contemplates a purpose-built regulatory environment for exchanges and intermediaries engaging in CTX activities — crypto asset markets (CAMs).
The Notice has three main parts:
- History and background underlying the proposed rulemaking.
- Proposed Regulation CTX (Reg CTX), setting out the CFTC’s preliminary understandings and potential regulatory approaches for crypto asset transactions within the existing retail-commodity provisions of the Commodity Exchange Act (CEA). The Notice summarizes CFTC staff’s understanding regarding use of leverage or financing in the cash or spot crypto asset market, what constitutes “actual delivery,” and whether a transaction recorded only on an exchange’s internal records complies with the CEA.
- Proposed Regulation CAM (Reg CAM) proposes a corresponding special category of CFTC-registered exchange (described as a “tailored subcategory” of a Designated Contract Market, or DCM), on which CTXs may, but are not required to be, listed, with related rules covering intermediaries, customer assets, margin, clearing, and settlement.
CFTC Chairman Michael Selig stated in an opinion article published the same day as the Notice that Reg CTX and Reg CAM “wouldn’t require crypto assets to trade on CFTC-registered platforms.” Instead, the Notice sets forth certain preliminary interpretations and regulatory proposals and seeks public comments to assist CFTC in developing a set of final rules. The Notice is not a final rule and does not impose new requirements.
History and Basis for Proposed Rulemaking
According to the Notice, the CEA’s retail commodity transaction provisions were intended to allow certain leveraged retail commodity transactions to be brought onto CFTC-regulated markets on a non-exclusive basis. In general, the provisions currently apply when a transaction involves a commodity; is offered to or entered into with a person who is not an eligible contract participant or eligible commercial entity; and is offered or entered into on a leveraged or margined basis — or is financed by the offeror, counterparty, or a person acting with them. The provisions include exceptions, including one for transactions that result in “actual delivery.”
The Notice states that the CFTC has not adopted a comprehensive set of rules explaining how these provisions apply to crypto assets. In the CFTC’s view, that uncertainty has left market participants unsure how to operate under federal rules and has contributed to the use of state licensing regimes, offshore platforms, and enforcement actions that address conduct only after it occurs.
In the Notice, the CFTC stated that it hopes to clarify application of the CEA to CTXs, provide a regulated path for eligible platforms and intermediaries, and adapt existing commodities-market requirements to crypto-asset markets.
Reg CTX: Covered Transactions
Offers of Leverage or Financing
The Notice sets forth the CFTC’s preliminary view that the CEA’s reference to transactions “offered” on a leveraged, margined, or financed basis applies even if a customer declines a financing option and completes the transaction without financing (i.e., on a “fully paid” basis).
The Notice explains that an offer could potentially be made through customer onboarding materials, account terms, exchange rules, margin documents, or other standard documentation. The Notice requests comments regarding whether financing facilitated or promoted by an exchange — such as through a related platform or an arrangement involving revenue sharing — should be considered an offer made by a person acting in concert with the exchange or counterparty.
Under the approach contemplated in the Notice, the availability of financing may affect the treatment of transactions beyond those in which customers actually borrow, use, leverage, or accept financing. Accordingly, the Notice proposes to apply the CEA and CFTC regulation to contracts offered on a leveraged or financed basis, even if ultimately entered into and settled without leverage, financing, or margining – at least until “actual delivery” of the underlying crypto commodity asset occurs. The CFTC asks for comments addressing whether this interpretation is workable and detailing what types of financing or leverage are common in crypto markets.
‘Actual Delivery’ of Crypto Assets
The CEA contains an exception for certain contracts of sale that result in “actual delivery.” Drawing on court decisions, the CFTC preliminarily views actual delivery as requiring a meaningful transfer of possession or control — not merely an entry on an intermediary’s books.
For crypto assets, the Notice states that possession and control may depend on who holds access credentials, such as the private keys, needed to control the wallet or account. The Notice asks whether delivery should include practical access to associated rights, such as participation in blockchain governance or staking, and whether an intermediary’s fees or restrictions might affect the determination.
The CFTC’s preliminary understanding is that transactions settled through on-chain protocols often result in actual delivery, because the asset is typically transferred directly to a purchaser’s wallet for storage. The Notice seeks comment on this view and on situations in which an asset remains subject to a lien or security interest in the customer’s account — or to other collateral after transfer is completed.
Asset Ownership Recorded Only on an Exchange’s Books
The Notice considers transactions in which a customer’s purchase is recorded on an exchange’s internal ledger, while the crypto asset remains in custody with the exchange or its custodian. The CFTC preliminarily believes that such a fully paid transaction may remain subject to the CEA until actual delivery away from the exchange occurs or unless another exception applies.
This is a threshold issue for exchanges or platforms that hold crypto assets in customer commingled or omnibus accounts and track each customer’s interest through internal records. The CFTC asks for comments on how such arrangements should be treated, including on customer protections and potential insolvency risk.
Reg CAM: Potential Framework for Exchanges and Intermediaries
The Notice discusses a potential rules-based regulatory framework for exchanges that list CTXs. The framework under consideration would apply existing CFTC rules and regulations to crypto asset trading where applicable, while also adopting new rules and regulations to address issues not covered by current rules.
A Special Kind of Registered Exchange
The CFTC contemplates a CAM as a tailored subcategory of DCM. DCMs are designated by the CFTC based on adherence to a set of core principles set forth in the CEA. The Notice proposes that within this existing structure, a DCM operating as a CAM would be able to list CTXs, as a non-exclusive way for these assets to be offered, subject to a set of requirements tailored specifically for these assets.
The Notice identifies potential rules for CAMs to implement the CEA’s core principles regarding listing standards, manipulation and market surveillance, position limits, trading information and recordkeeping, execution methods, operational safeguards, and emergency powers. The Notice asks how these requirements should apply to features of crypto markets including 24/7 trading, public blockchain records, blockchain outages or forks, and the use of smart contracts.
The CFTC notes that a CAM would not be excluded from offering spot-market crypto assets under state-level rules if the CAM lists crypto asset transactions that are not CTXs. It further solicits comments regarding whether such listing(s) would be a commercially viable option.
Intermediaries and Customer Assets
The proposed framework contemplates that CTXs would be intermediated by a futures commission merchant (FCM). The FCM would be subject to customer protection, disclosure, financial, and risk-management obligations comparable to those of FCMs that do not deal with CTXs. The CFTC asks whether the framework should include a limited-purpose FCM registration for firms that handle only CTXs.
The Notice states that current FCM requirements were designed for more conventional futures activities and may not be applicable to crypto assets. It asks whether rule changes are needed concerning segregation of customer property, permitted depositories, custody providers, capital requirements, and FCM or intermediary bankruptcy.
In particular, the Notice seeks comments concerning how customer crypto assets would be treated if a DCM, CAM, FCM, or custodian became insolvent. The Notice also requests comments regarding whether “proof of reserves” practices — where an independent firm assesses whether an intermediary’s assets are sufficient to cover customer liabilities — should have a role in the process.
Financing, Margin, and Leverage
The Notice proposes possible financing for retail customers through arrangements with an FCM or a qualifying bank sponsored by an FCM. Under the contemplated approach, a platform’s rules would describe the general terms of these arrangements, but platforms would be able to customize individual financing agreements for each customer.
The CFTC seeks input on who should be allowed to provide financing, how margins should be set, what assets should qualify as collateral, and how liquidations should work. The Notice also asks whether smart contracts should be allowed to support processes such as continuous margining or automatic liquidation. It further requests comment on whether customer assets could be rehypothecated — that is, reused by an intermediary for its own purposes or to support other transactions.
Clearing and Settlement
The Notice characterizes a typical CTX as combining a spot purchase of a crypto asset with a separate financing arrangement. The Notice then asks whether the existing derivatives clearing organization (DCO) framework for clearing and settling listed derivatives transactions might be adapted to CTXs.
Among other questions, the CFTC asks whether a DCO should be required to provide a limited guarantee against certain losses, whether losses should ever be shared among participants, and whether all or part of a transaction may settle through a platform’s internal records or blockchain technology rather than a traditional clearing process. The Notice also asks how the CEA’s clearing rules would interact with bankruptcy protections for customers under CFTC’s Part 190 regulations.
Integrated Business Structures and Conflicts
The Notice indicates that CFTC’s staff believes certain CTX businesses may be structured to combine exchange, custody, financing, and settlement functions within one corporate group. The Notice requests comments regarding whether within this proposed structure, a CAM would also be able to register as an FCM or DCO, or to operate with affiliated entities in these roles.
The CFTC identified potential benefits from this structure, such as efficiency and transparency, as well as possible conflicts of interest. For example, an affiliated exchange, lender, and clearing entity may have incentives that do not always align with customers’ interests. The Notice asks what safeguards and disclosures would be needed.
Other Important Issues
The Notice requests public comments regarding how Reg CTX and Reg CAM might best address:
- Listing and manipulation risks: What information should an exchange review before listing an asset, including its liquidity, governance, supply, code, and network security?
- Market data and surveillance: When may public blockchain information help exchanges monitor trading, and what additional records or reconciliations are needed?
- Securities law boundaries: How should the CFTC approach a crypto asset that is determined to be, or to be part of, an investment contract or another security subject to SEC and state regulation?
- Non-fungible tokens: How should the CFTC’s proposed methodology apply to crypto assets that are not standardized or interchangeable?
- Small platform exemption: Should exchanges or platforms listing only a limited number of CTXs be exempt from CAM registration, and how should a threshold be established?
- Coordination with other rules: How should the framework integrate with state licensing regimes and federal and state securities laws?
Key Takeaways
The Notice summarizes various approaches the CFTC is considering as it develops a more detailed framework for regulating leveraged, margined, or financed retail crypto asset spot transactions. Market participants whose businesses involve exchange trading, financing, custody, or on-chain record systems may wish to consider how CFTC’s preliminary views and potential regulatory approaches might impact their operations.
Many additional questions remain, including how crypto assets would be protected, what risk and general disclosures are appropriate for retail customers, and how crypto-asset transactions would be cleared. Addressing these questions and furthering the objectives articulated in the Notice would require future regulatory initiatives. As CFTC Chairman Selig stated in his opinion article, “Today’s action is only the beginning. The CFTC is starting the process of addressing gaps in crypto-asset market structure and creating clear rules of the road for innovators and market participants.”
The deadline for submitting comments responding to the Notice is Dec. 14, 2026.