Written by Daniel Okafor
The CFTC’s advanced notice of proposed rulemaking on crypto asset transactions was published in the Federal Register on 13 October, opening a formal comment period on a framework that would create a purpose-built venue category for crypto trading.
The most consequential crypto document of the week is not a token launch or a protocol upgrade. It is a notice that reached the Federal Register on 13 October, formally opening public comment on how the United States intends to regulate retail crypto trading.
The Advanced Notice of Proposed Rulemaking, titled Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets, concerns section 2(c)(2)(D) of the Commodity Exchange Act and the retail commodity transactions described under it that involve crypto assets — a category the agency abbreviates as CTXs. The Commission intends to build what it calls a comprehensive framework of fit-for-purpose rules around them.
Three questions are put to the public. How the Commission can prevent abusive practices in crypto asset markets under a uniform national regime. How it can supply crypto-specific contextual information about requirements and practices that the industry commonly accepts and that the agency, drawing on its oversight of crypto markets since 2014, considers best practice. And whether to codify through rulemaking a subcategory of designated contract market registration known as a “crypto asset market,” purpose-built for these transactions.
That third item is the substantive one. Rather than forcing crypto venues into a registration category designed for traditional futures exchanges, the proposal would create a bespoke category. If it survives into a final rule, it becomes the closest thing the United States has to a purpose-built licensing regime for crypto trading venues.
Chairman Michael S. Selig framed the action in enforcement terms, saying the Commission would “take every necessary step to establish regulations that are designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX.” The notice also invokes a presidential directive to propose a federal crypto asset market structure using the agency’s existing statutory authorities — a signal that the framework is intended to rest on the Commodity Exchange Act rather than new legislation.
Comments must be in writing and received within 60 days of Federal Register publication, and will be posted on Regulations.gov. An advanced notice is not a proposed rule and binds no one; the agency will use the responses to decide whether to proceed.
Two parallel tracks are worth watching. The CFTC has also published a separate notice of proposed rulemaking on market clarity, and the SEC has proposed a custody framework for investment advisers and funds that would, under certain conditions, permit self-custody and allow the use of state trust companies.
Read together, the two agencies are constructing frameworks from different statutory authorities and arriving at different answers to the same questions — who may hold customer assets, what a trading venue is, and which regulator supervises it. The comment record will show whether those answers converge or simply accumulate.
Three things to watch. Whether the crypto asset market subcategory survives into a proposal, because that determines whether venues get a real licensing path. How the CFTC’s treatment of retail commodity transactions interacts with the SEC’s custody conditions, since a venue framework without a custody answer is incomplete. And whether the 60-day window produces substantive industry engagement or a set of position papers, because an advanced notice is only as useful as the comments it attracts.
