Regulatory developments across the Atlantic marked the week of October 5-9, with the U.S. Commodity Futures Trading Commission and European authorities establishing new boundaries for crypto markets.
CFTC Develops Framework for Leveraged Crypto Trading
On October 5, the CFTC issued an advance notice of proposed rulemaking addressing retail crypto-asset transactions offered on a leveraged, margined, or financed basis. The notice initiates a rulemaking process under Section 2(c)(2)(D) of the Commodity Exchange Act and requests feedback on safeguards against abusive practices, market-specific requirements, and possible creation of a crypto-asset market subcategory within designated contract market registration.
The agency is not yet proposing or finalizing a rule. Comments will be due 60 days after Federal Register publication. For trading platforms, such rules could provide a defined federal route for certain retail leveraged products, though businesses may continue facing state money-transmission and consumer-protection requirements alongside federal commodities regulation.
CFTC Clarifies Prediction Markets and Gambling Boundaries
On October 9, the CFTC proposed defining qualifying event contracts—covering politics, sports, culture, and weather—as swaps within its exclusive jurisdiction. The same day, the agency adopted an interim final rule excluding specified casino and sportsbook products from the swap definition, effective upon Federal Register publication.
These actions represent a new phase in prediction-market oversight by establishing a broader jurisdictional definition while separating federally regulated derivatives from state gambling law. The proposal allows 30 days for comments.
EU Restricts Access to Noncompliant Stablecoins
On October 8, the European Securities and Markets Authority published an opinion requiring crypto-asset service providers authorized under the Markets in Crypto-Assets Regulation to stop providing EU clients with services involving noncompliant asset-referenced tokens and e-money tokens. The requirement covers trading platforms, exchanges, custody, and portfolio management activities.
National regulators must ensure providers implement technical, contractual, and organizational controls preventing customers from acquiring additional exposure to noncompliant stablecoins. Pre-existing exposure should be remediated within three months of publication, with limited services continuing temporarily for liquidation and safekeeping.
EU Council Supports Direct ESMA Supervision of Major Crypto Firms
On October 9, the Council of the European Union agreed on key negotiating positions for the Market Integration and Supervision Package. Under the Council's position, ESMA would directly supervise the most significant cross-border crypto-asset service providers, narrower than the European Commission's proposed approach to supervise all qualifying providers.
The measure is not final law. Parliament must adopt its own position before formal negotiations begin. Larger, cross-border providers could eventually answer directly to ESMA, while smaller firms remain supervised by national authorities.
New York Settles With Celsius Co-Founder
On October 9, New York Attorney General Letitia James announced a settlement with Celsius co-founder and former CEO Alex Mashinsky. The settlement permanently bars Mashinsky from the securities, commodities, and cryptocurrency industries and establishes conditional payment obligations of up to $35 million. New York's 2023 lawsuit alleged misleading statements about Celsius's safety and financial condition while engaging in unregistered activity. Mashinsky is separately serving a federal criminal sentence.
