The Commodity Futures Trading Commission (CFTC) is moving forward with new rulemaking designed to prevent another exchange collapse similar to FTX's 2022 bankruptcy, according to CFTC Chair Mike Selig.
Speaking on Fox Business Network's Varney & Co. show Wednesday, Selig said that crypto exchanges would have the opportunity to register with the CFTC to safeguard digital asset spot markets. He pointed to the 2022 collapse of FTX, where founder Sam Bankman-Fried stole over $8 billion in customer funds. Bankman-Fried is currently serving a 25-year prison sentence for fraud and related crimes.
Federal Registration Framework
Selig highlighted that a CFTC-registered subsidiary of FTX kept customer funds safe through segregation requirements. "That can't happen under our regime," he said, referring to future collapses.
The CFTC this week sought public comment on a framework that would create a new federal registration category called a "crypto asset market" for exchanges offering leveraged, margined, or financed crypto trades to retail customers. Exchanges that do not offer leverage could remain under state licenses.
The agency interprets "leverage" broadly, which could bring even fully paid trades under its oversight unless customers take delivery of their cryptocurrency.
Regulatory Path Forward
The CFTC is relying on powers it already possesses to regulate crypto markets. Selig noted that some exchanges may choose to remain under state regimes, while others will register federally.
The regulator's push comes after lawmakers last month blocked the Clarity Act, long-awaited legislation on crypto regulation. Both the CFTC and Securities and Exchange Commission have taken a more receptive approach to the crypto industry since President Donald Trump took office.
