CFTC Opens an Optional Lane for Retail Crypto Leverage

On October 5, 2026, the Commodity Futures Trading Commission asked the public how to write its first crypto rulebook for retail trades that use margin, leverage or financing. The paper is an advanced notice, a request for comments, not a license any exchange can use yet.

Chairman Michael S. Selig framed Regulation CTX and Regulation CAM as the start of a federal product, not a takeover of the cash market. Venues that want one national supervisor could offer leveraged retail crypto. Venues that do not can stay with state money-transmitter licenses and sell unleveraged spot.

A 60-Day Clock Starts on CTX and CAM

Release 9307-26 published an advanced notice of proposed rulemaking on section 2(c)(2)(D) of the Commodity Exchange Act. The docket is RIN 3038-AF80 and would touch 17 CFR Parts 1, 38 and 39. The Commission had already sent the package to the White House in September.

Selig, the agency’s 16th chair, was sworn in on December 22, 2025. He said the American people deserve “clarity, certainty, and consumer protections” in crypto markets, and that the work is grounded in the CEA and in President Donald Trump’s order to build a federal market structure with the powers the agency already has. He also said the rules should be designed to prevent frauds such as FTX, not only to sue after the collapse.

The notice asks for written comments within 60 days of Federal Register publication. Those comments will sit on Regulations.gov and feed a later choice: write a real proposed rule, or not. Until the Register prints a date, no one has a calendar deadline, and no CAM registration exists.

Today, the @CFTC is doing its part to deliver clear rules of the road for crypto asset markets with its advanced notice of proposed rulemaking on Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets. Now live on https://t.co/ibFNpmqx04. pic.twitter.com/wYcEbRhqpq

— Mike Selig (@ChairmanSelig) October 5, 2026

That gap is easy to miss in the headline version of this story. An advanced notice is the earliest formal step. It is a list of questions, including how to stop abusive practices under a national regime, how to write crypto-specific compliance guidance from the agency’s work in these markets since 2014, and how to codify a new subcategory of designated contract market called a crypto asset market.

The Senate Left a 49-50 Hole

Selig went to Fordham Law’s Blockchain Regulatory Symposium in New York the same day and did not hide the politics. He said he was disappointed Congress had failed to put the Clarity Act on the president’s desk. That bill, H.R. 3633, would have written the securities line into statute, required centralized crypto exchanges and brokerages to register with the CFTC, and set core principles for those firms.

The Senate never opened that debate. On September 15, 2026, cloture on the motion to proceed failed in a cloture vote of 49 to 50. The motion needed 60 votes. It finished 11 short, and short of a simple majority. Senator Chris Coons did not vote. Senator Thom Tillis switched to no so a motion to reconsider could be filed, which keeps the file from closing.

The House had passed the bill 294-134 in July 2025. The Senate Banking Committee had voted 15-9 in May 2026. Galaxy Research’s Alex Thorn, head of firmwide research, wrote that every Democrat voted no, including several who had spent months on the text, and that Republican nos included Josh Hawley and Jerry Moran over stablecoin yield. Trump had already told the agencies to deliver market structure with or without a statute. Selig said the CFTC would help him do that with existing authority.

FROM A DEAD BILL TO AN ADVANCED NOTICE

1. July 2025: The House passes H.R. 3633, the Digital Asset Market Clarity Act, 294-134.
2. May 2026: The Senate Banking Committee clears the bill 15-9.
3. September 15, 2026: Senate cloture fails 49-50, 11 votes short of the 60 needed to begin debate.
4. September 2026: The CFTC files the CTX and CAM package with the White House under RIN 3038-AF80.
5. October 5, 2026: The Commission publishes the advanced notice, and Selig speaks at Fordham and in an opinion article posted by the agency.

Earlier in 2026 the CFTC and the Securities and Exchange Commission, under Chair Paul Atkins, issued a joint interpretation that put bitcoin and ether, among other assets, in the CFTC’s non-security bucket. Selig described five buckets: digital commodities, digital collectibles, digital tools, stablecoins and digital securities. Reciting that taxonomy in a speech is not a new commodity ruling for any single token.

Selig’s Ladder Puts Leverage on the Second Rung

The legal hook is old. Dodd-Frank put certain leveraged retail commodity transactions onto a CFTC-registered designated contract market unless an exception applies. Selig said the last administration used that hook to sue platforms and protocol teams, including a default judgment against a decentralized autonomous organization served through a website help chat, and a fine against a software developer whose interface let users tap an automated market maker. The agency, he said, did not write the matching rulebook that would have let the same activity happen on-exchange.

He now wants that rulebook, and he drew it as a ladder. The federal option for crypto exchanges sits on the middle rung. Only Congress, he said, can force every crypto exchange onto the Commission’s books. Congress has already said that a firm that wants to sell retail crypto on a margined, leveraged or financed basis must register. The agency never wrote purpose-fit rules for that trade. It only enforced.

SELIG’S THREE RUNGS FOR U.S. CRYPTO VENUES

A firm already registered as a designated contract market could list CTXs under tailored rules. A firm that wants to sell only CTXs could register as an ordinary DCM or as a CAM, a new subcategory built for that product. A CAM would still live under statutory DCM core principles, Selig said, but the implementing rules would be written for crypto instead of grain and energy futures. A venue that also lists futures, options or swaps would stay in the current DCM framework.

What a Crypto Asset Market Would Require

Selig walked through the core principles he wants translated into crypto terms. Core Principle 3, on contracts that are not readily susceptible to manipulation, would look at how a token was distributed, how concentrated it is, lock-up and vesting schedules, and whether the issuer runs programmatic issuance or buybacks. Core Principles 11 and 12 cover financial integrity, customer funds and abusive practices. Principles 16 and 20 cover conflicts and system safeguards.

The customer-protection piece is the part that reads as a direct answer to FTX. In the Fordham remarks, Selig said FTX’s operators stole more than $8 billion in exchange customer assets. The firm had a U.S. unit with state money-transmitter licenses, and those customers’ funds were gone. Customer property at FTX’s CFTC-registered subsidiaries, he said, stayed segregated and secure.

SAFEGUARDS ON THE TABLE FOR CTX TRADING

• FCM gate: Covered retail CTXs would generally run through a futures commission merchant that holds accounts, meets capital rules, and segregates customer property.
• Bank Secrecy Act: Routing the customer-facing work through an FCM would pull that activity under anti-money-laundering, customer-identification and suspicious-activity reporting duties.
• Proof of reserves: Exchanges that keep customer property in omnibus accounts would face a proof-of-reserves duty, which Selig said would have helped FTX’s retail customers.
• Listing tests: CAMs listing CTXs would have to show a contract is not readily susceptible to manipulation, including token-distribution and concentration facts that futures listings do not raise in the same way.

Proof of reserves is not the same as the segregation that actually held at the registered FTX units. A reserve snapshot can show coins in a wallet. It does not, by itself, show every liability, every affiliate loan, or which legal entity owes the customer. The notice still treats it as a crypto-native add-on for omnibus accounts, sitting on top of the older FCM segregation model rather than replacing it.

The FCM gate is also the cost center. Small platforms that want U.S. retail leverage would need a registered intermediary, or they would have to become one. That is a real barrier, and it is one reason an offshore venue can still look cheaper even if the federal door is open.

Ordinary Spot Trading Stays With the States

Selig was explicit about the hole the statute leaves. State money-transmitter laws, he said, grew out of early-1900s rules for remittances and payments. They pushed exchanges into licenses in up to fifty states and territories, next to gift-card issuers and check cashers. Those regimes require know-your-customer and anti-money-laundering work. They do not require orderly trading, anti-manipulation rules, or a split between brokering, dealing, executing and clearing.

That is still the home of unleveraged spot under this plan. The CFTC can police fraud and manipulation in that cash market. It cannot, on Selig’s own account, pull ordinary bitcoin buys onto a CAM. People who mean “trading crypto” as clicking buy with cash they already have are not the customer this notice is written for. The customer is the one who can lose more than the cash posted, fast.

He compared the split to banking, where a firm picks a federal or state charter and lives with different permitted activities. Crypto firms, in that telling, should pick state licenses or federal registration based on the product they want to sell. The prize for climbing to Rung 2 is retail leverage. The price is FCM intermediation, segregation, surveillance and, if the CAM idea is written into a later rule, a new federal exam staff.

FCM Intermediation and the 28-Day Wallet Exit

The same statute that drags leveraged retail onto an exchange also leaves an off-ramp. Selig said the CEA excepts CTXs that involve “actual delivery” of the commodity within 28 days. The Commission proposes to say that delivery of a crypto asset to a user’s external, non-custodial wallet within 28 days generally meets that test. Self-custody, in that reading, can keep a financed or delayed delivery from being forced onto a CAM.

That line will be fought in the comments. A 28-day clock is a long time in a market that settles in minutes. If “delivery” is easy to claim and hard to verify, the on-exchange duty shrinks. If the Commission writes it tightly, more retail leverage gets pulled in. The notice is where that fight starts, not where it ends.

Selig also said the agency is looking at a separate policy, outside this notice, for developers who publish software but do not solicit or take orders, control execution, or hold customer assets. “A person should not have to register as an introducing broker simply because that person shipped code,” he said at Fordham. That sentence is a signal to protocol teams who watched the last round of cases. It is not a safe harbor in this docket.

Congress Still Holds the Mandate the Agency Lacks

In the opinion article the Commission posted the same day, Selig drew the limit in one paragraph.

Unlike the Clarity Act, these regulations wouldn’t require crypto assets to trade on CFTC-registered platforms. We don’t have the authority to impose such a requirement without congressional action. However, the rules would establish a purpose-fit option for crypto-asset exchanges that wish to operate under a single federal market-regulatory scheme.

Michael S. Selig, CFTC chairman, opinion article posted by the Commission

He added that those registered platforms, unlike state-licensed exchanges, could let retail customers trade on a margined, leveraged or financed basis, and that such platforms are “squarely within the CFTC’s regulatory jurisdiction.” He also wrote that agency action cannot substitute indefinitely for a statute. The last chapter of crypto regulation, he said, was written by crisis.

WHAT WE KNOW

• The document: An advanced notice, not a final rule and not yet a proposed rule, published October 5, 2026 as release 9307-26.
• The product: Retail crypto trades on a margined, leveraged or financed basis, which the agency calls CTXs, plus a possible CAM subcategory of DCM registration.
• The limit: The Commission says it cannot require all crypto trading to occur on its platforms without a new law.

WHAT IS UNCONFIRMED

• The calendar: The 60-day comment clock starts only when the Federal Register publishes the notice, and that date is still open.
• The next paper: Whether the Commission moves from this notice to a notice of proposed rulemaking, and on what timetable.
• The applicants: Which venues would actually seek CAM status, and how the final FCM, proof-of-reserves and 28-day delivery tests would read.

The comment file will fill with exchanges that want a single federal supervisor, state regulators who do not want their cash market gutted, and firms that will stay offshore if the FCM gate is too expensive. That is not a CAM license. It is the argument the Commission asked for, twenty days after the Senate refused to write the mandate itself.

Disclaimer: This article is news reporting and analysis of a CFTC advanced notice and related public remarks. It is informational only and is not investment, trading, legal or tax advice. Nothing here is a recommendation to buy, sell, margin or leverage any crypto asset, or to register or avoid registration with any regulator. Readers should consult a licensed attorney and, where trading or investing is involved, a qualified financial adviser before acting on any product, platform or filing discussed. Figures, comment windows and registration paths reflect the Commission’s October 5, 2026 notice and public statements and may change when the Federal Register notice appears or when any later proposed rule is issued.