The Commodity Futures Trading Commission is moving ahead with a new set of proposed crypto market rules and has opened a public comment process on the plan. The effort comes after the Clarity Act, a bill that would have shifted much of digital asset oversight to the CFTC, failed to advance in the Senate in September.

CFTC Chairman Michael Selig said the agency’s proposal is narrower than what Congress considered. In an opinion piece published by The Wall Street Journal, he wrote that the regulator cannot require crypto assets to trade on CFTC-registered venues without new legislation, but it can offer a federal regulatory option for exchanges that choose to register with the agency.

What the proposal would cover

According to Selig, the proposed framework would set requirements for crypto-asset exchanges that register with the CFTC. He described it as a purpose-built alternative for platforms seeking to operate under a single federal market-regulatory scheme rather than relying on a patchwork of state licenses.

He also said those CFTC-registered exchanges would differ from standard spot-trading venues because they could permit retail customers to trade on a margined, leveraged or financed basis. Selig argued that exchanges offering that kind of activity fall squarely within the CFTC’s regulatory jurisdiction.

Limits on the agency’s authority

Selig stressed that the proposal would not recreate the broader market structure envisioned by the Clarity Act. Unlike that bill, he said, the CFTC cannot mandate that crypto assets be traded on platforms registered with the agency unless Congress gives it that authority.

That distinction is central to the proposal. Rather than imposing a universal trading requirement across the market, the CFTC’s rules would create a voluntary federal pathway for exchanges that want to operate inside a CFTC regime.

Public input and market conduct concerns

The agency said it is seeking public comment on the proposed rules, including on approaches to preventing abusive practices in crypto-asset markets. The comment process signals that the CFTC is trying to build out a more defined framework for the parts of the market it believes already fall within its remit.

The source article did not specify a deadline for comments or provide further detail on the specific safeguards under consideration.

How the stalled bill changed the path forward

The Clarity Act would have largely placed digital assets under the CFTC’s regulatory purview. That prospect had drawn support from industry stakeholders who see the derivatives regulator as more accommodating to the sector than the Securities and Exchange Commission.

But in September, the bill failed to clear a cloture vote in the Senate, falling short of the 60 votes needed to move debate forward. With that legislative route blocked for now, the CFTC is pursuing a narrower rulemaking approach based on the authority it says it already has.

Source: dailyhodl.com