US CFTC's latest ANPRM seeks to use existing authority to build a crypto spot market framework

PANews reported on October 6, citing crypto journalist Eleanor Terrett, that the US Commodity Futures Trading Commission (CFTC)'s newly released 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 be built on existing DCM, DCO and FCM registrations and create a new "crypto asset market" category. A 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 may choose not to join the framework and continue to retain state money transmission 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, 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 offers leverage, margin or financing, even if customers do not actually use leverage. The proposal also touches on "actual delivery" under Section 2(c)(2)(D), and appears to focus on whether customers own/control the assets, rather than relying solely on book entries in omnibus accounts. 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.