Can The CFTC Provide Clarity? The CFTC's Anticipated Regulation CTX And Regulation CAM

This post is accompanied by a special edition podcast of The Desk that focuses only on the CFTC’s Anticipated Regulation CTX and Regulation CAM. Listen on Apple Podcasts or Spotify.

On October 5, 2026, the Commodity Futures Trading Commission (the “CFTC”) released an advance notice of proposed rulemaking (“ANPRM”) regarding plans to establish a comprehensive regulatory framework for retail commodity transactions involving crypto assets (“CTXs”) and exchanges that offer retail crypto asset trading (“Crypto Assets Markets or CAMs”). The ANPRM is not a rule but is a preliminary step in the rulemaking process that sets forth two proposed frameworks: (1) Regulation CTX, governing when retail crypto asset transactions fall under the CFTC’s jurisdiction pursuant to section 2(c)(2)(D) of the Commodity Exchange Act (“CEA”), and (2) Regulation CAM, which would establish a new category of Designated Contract Market (“DCMs”) for crypto asset exchanges. The ANPRM solicits a variety of comments on how that regulatory framework should be formed with comments due 60 days after Federal Register publication.

The CFTC published the ANPRM three weeks after the CLARITY Act failed a cloture vote in the Senate, and as signaled by Chairman Selig previously, is the initial step, in the absence of new statutory authority, to provide regulatory certainty and a framework for crypto-asset market regulation.

CFTC’s Authority Under the Commodity Exchange Act

CEA section 2(c)(2)(D) grants the CFTC authority to regulate “2(c)(2)(D) transactions”, unless an exception applies. A “2(c)(2)(D) transaction” is “any agreement, contract, or transaction in any commodity that is—(I) entered into with, or offered to (even if not entered into with), a person that is not an eligible contract participant or eligible commercial entity; and (II) entered into, or offered (even if not entered into), on a leveraged or margined basis, or financed by the offeror, the counterparty, or a person acting in concert with the offeror or counterparty on a similar basis.”

Section 2(c)(2)(D)(ii) of the CEA provides an exception from CFTC regulation for transactions with “actual delivery” of the commodity.

The ANPRM sets forth a preliminary position that interprets actual delivery such that a retail crypto transaction where a customer receives title to a crypto asset through book-entry on a CAM’s books and records, does not constitute actual delivery. If the customer instead takes possession of a digital wallet address or account, then actual delivery would occur and the transaction would not be subject to regulation under 2(c)(2)(D).

State Licensing Regimes

One of the driving forces behind the ANPRM is the CFTC’s view that the patchwork of state licensure requirements and regulations that apply to crypto assets “no longer adequately address risks arising in financial markets in crypto assets with consumptive uses and functionalities that have ‘move[d] far beyond just currency’.” As such, the CFTC aims to protect retail participants by bringing certain crypto asset transactions under the purview of the CEA to address conflicts of interest, market manipulation, and to provide customer protections and promote transparent trading. Furthermore, the Commission notes that crypto asset exchanges that operate under state licensure regimes have no legal mechanism or authority to self-regulate, surveil, establish and enforce rules, and bring disciplinary matters like CFTC-registered DCMs.

The ANPRM defines “Crypto assets” to mean “any digital representation of value that is recorded on a cryptographically-secured distributed ledger.” This excludes both payment stablecoins issued by permitted payment stablecoin issuers under the GENIUS Act and payment stablecoins issued by a foreign payment stablecoin issuer.

The Proposed Regulatory Framework

There are two parts to the ANPRM:

(1) Regulation CTX, a set of preliminary interpretations of section 2(c)(2)(D) for crypto asset transactions, and

(2) Regulation CAM, a contemplated crypto asset exchange regulation framework.

Each comes with detailed questions.

1. Regulation CTX – Crypto Asset Transactions

The CFTC provides three interpretations that will be critical to establishing its statutory authority to include broad categories of transactions and markets in the proposed regulations.

• “Offer” extends broadly to the customer relationship. Section 2(c)(2)(D)(i) covers transactions “offered (even if not entered into)” on a leveraged, margined or financed basis. The CFTC reads this to mean that a “covered offer” attaches to every transaction in which a retail customer could accept leverage, including trades the customer fully pays for. A covered offer can be made in onboarding documents, exchange terms and conditions, or margin documentation, and can apply to all transactions on an exchange, in an account, or in a product class.
• “Acting in concert” captures third-party credit. A transaction can be considered to be financed if the platform sets or influences its terms, markets it, shares revenue from it, operates the platform through which it is accessed, or otherwise provides “material assistance.” The CFTC asks whether surfacing onchain lending “vaults” in the same interface is itself a covered offer.
• “Actual delivery” means keys and rights, not book entries. Building on CFTC v. Monex Credit Co., 931 F.3d 966 (9th Cir. 2019), the CFTC suggests possession and control may require holding of private keys. For assets with governance or staking rights, it may also require “unfettered access” to those rights, including staking without intermediary fees. The CFTC also indicates that Congress granted it the authority over the mechanics of delivery itself, because the exception turns on whether a sale “results in” actual delivery (CEA 2(c)(2)(D)(ii)(III)(aa)).
• Fully paid, open positions stay in the regulatory regime until delivery. A customer who declines to utilize leverage or financing, but holds a book-entry position remains under the regulatory framework until actual delivery occurs. After delivery, only the CFTC’s anti-fraud and anti-manipulation authority remains.
• Onchain settlement gets favorable treatment. The CFTC preliminarily understands that most onchain trading protocols deliver assets directly to the purchaser's wallet and therefore satisfy actual delivery, in some cases even where a lien remains outstanding.

2. Regulation CAM: A Framework for Crypto Assets Markets

Regulation CAM anticipates a new subcategory of DCMs with core principles specifically tailored to CTXs.

The release also discusses a topic that is likely to surface: preemption. It argues that by treating 2(c)(2)(D) transactions “as if” they were futures, Congress displaced varying state law over the trading facilities that offer them, citing American Agricultural Movement v. Board of Trade, 977 F.2d 1147 (7th Cir. 1992). Purely unleveraged spot trading that is not margined or financed, however, would be subject to state regulation.

Is the CFTC’s Approach Viable and Sustainable?

Regulatory frameworks premised on novel statutory interpretation or exemptive authority are more durable than Commission or CFTC staff guidance and no-action letters, but can present potential weaknesses compared to statutory authority expressly contemplated by legislation (as is the case with the Clarity Act).

The case for durability:

1. It rests on statute and an express delegation. The on-exchange requirement in section 2(c)(2)(D)(iii) is Congress’s, not the CFTC’s. Dodd-Frank also expressly authorizes the CFTC to define the terms it added to the CEA (15 U.S.C. 8321(a)). After Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), an express delegation of definitional authority is where an agency stands strongest, and the release cites Loper Bright for that proposition.
2. It is opt-in and adds protections. CAM registration is voluntary and brings FCM intermediation, DCO clearing and customer segregation to a market that largely lacks them. A future CFTC skeptical of crypto assets would struggle to argue that those protections go too far. The release deliberately builds its record on statements by former Chairmen Massad and Behnam and former Commissioners Johnson and Stump.
3. Rules are of greater effect than guidance. The December 2025 withdrawal of the 2020 actual delivery guidance shows how easily guidance can be reversed. A final rule can be undone only through another rulemaking with a reasoned explanation (FCC v. Fox Television Stations, 556 U.S. 502 (2009)), and reliance interests grow once firms register, build systems and onboard customers. In the absence of legislative action, it would be difficult for a Commission to reverse rulemakings in this area.
4. It creates a constituency. Registered CAMs, FCMs and sponsoring banks would have every reason to defend the benefits of the framework once established.

The case against:

1. There is no express statute supporting these frameworks. CLARITY failed cloture 49-50 on September 15, 2026. Chairman Selig's own op-ed conceded that agency action cannot “substitute indefinitely” for a statutory framework.
2. Loper Bright cuts both ways. Courts will not defer to the CFTC’s reading. The most exposed positions are that a declined offer of leverage can still subject fully paid CTX’s to the statute, that terms of service can make a class-wide offer, and the CFTC’s interpretation on the mechanics of actual delivery. Monex is precedent only with respect to the Ninth Circuit.
3. Preemption will be contested. Conflict preemption is decided case by case, and state regulators are already litigating against CFTC preemption in the event-contract space. A CAM’s insulation from state law may be fought state by state.
4. Some statutory constraints cannot be circumvented easily. Section 4(c)(2) limits exemptions from section 4(a) to transactions between “appropriate persons,” which complicates any de minimis exemption for retail activity. Part 190 customer-property protection turns on “commodity contract” status, which for an FCM means DCO-cleared (11 U.S.C. 761(4)(F)(ii)), so a light-touch clearing model could weaken bankruptcy protections. The DCO core principles in CEA 5b(c)(2) are statutory requirements.
5. Political Landscape. A proposed and then final rule likely lands in late 2027, just ahead of the 2028 election. The release frames the prior era as “regulation by enforcement,” which invites a future Commission to frame its own reversal the same way, a Commission that exceeded its authority. The framework also relies on the Joint Crypto Asset Taxonomy and the Securities and Exchange Commission’s (“SEC’s”) proposed Regulation Crypto Assets, both of which a future SEC could revisit.

The CLARITY Act Connection

The ANPRM is the CFTC’s best efforts to fill the void left by an absence of the CLARITY Act. It uses the one entry point into regulating spot commodity markets that Congress already gave the agency, retail leverage, to build a voluntary version of the federal regime CLARITY would have mandated.

The House passed CLARITY (H.R. 3633) 294-134 on July 17, 2025. On September 15, 2026, the Senate failed to invoke cloture on the motion to proceed, 49-50, amid disputes over ethics provisions and stablecoin yield. Two days later the CFTC moved forward with the ANPRM. Chairman Selig's October 5 op-ed acknowledged that, unlike CLARITY, the CFTC cannot require crypto trading on registered platforms without Congress. The ANPRM itself never mentions CLARITY, but its own heading for 2026 is “Regulatory Clarity for Crypto Asset Markets,” and the press release opens with “clarity, certainty, and consumer protections.”

The practical consequence is that comments should be written for two worlds. If CLARITY is revived (Senator Tillis voted no specifically to preserve a motion to reconsider), this record becomes the starting point for the CFTC’s implementing rules for digital commodity exchanges and brokers. If it is not, Regulation CTX and CAM may be the crypto market regulatory regime for the foreseeable future.

What to Expect in the Comment File

Expect a far larger and more divided record than the 11 letters the CFTC received on its August 2025 request for comment regarding listing spot crypto transactions on DCMs.

Five issues are likely to dominate:

1. The breadth of “covered offer” and “acting in concert.” This is the provision that decides whether a state-licensed spot business can coexist with any form of credit provided to customers.
2. An internal tension on liens. Footnote 282 says actual delivery may occur even with a lien outstanding, while Question V.H.iv says delivery may not occur where a lien remains. Commenters are likely to argue both sides.
3. Mandatory FCM intermediation and DCO clearing for a spot leg that settles internally. Expect detailed alternatives from exchanges and equally detailed objections from incumbents.
4. Insolvency treatment. Part 190 versus a UCC Article 8 structure will draw comments on the potential bankruptcy treatment of customer funds and assets.
5. Cost-benefit. Commenters are likely to supply data on the potential costs and benefits that will shape the future analysis that the proposed rules must include.

Next Steps

The ANPRM must be followed by a proposed rule and then a final rule, and folks in the industry do not expect binding rules before late 2027. The interpretations, however, tell the market how the agency reads the statute today, and nothing in an ANPRM is a safe harbor. There are four steps worth taking now:

1. Review any leverage, margin, lending and financing touchpoints, including those run by affiliates and partners.
2. Test custody and staking flows against the private-key and “unfettered access” standards.
3. Decide whether to comment directly, through a trade association, or both.
4. Calendar the deadline: 60 days after Federal Register publication.