CFTC Sends Crypto Rules to White House for Review
The CFTC has taken the next step toward creating its own framework for crypto regulation in the United States.
On Thursday, the agency submitted a new regulatory proposal to the White House Office of Management and Budget (OMB) for review.
The move comes as Congress remains stuck on the CLARITY Act and uncertainty grows around the future of the bill.
A Regulatory Framework Outside Congress
The CFTC’s proposal was submitted to OMB on Thursday, but the details have not yet been made public.
That means it’s still unclear exactly which crypto assets would fall under the new rules, what exchanges and other platforms would be required to do, or how far the CFTC believes its existing jurisdiction extends.
The proposal is now in the hands of the White House for review.
Once that process is completed, it is expected to return to the CFTC for a vote and public comment. Another vote would then be required before the rules could take effect.
In other words, this is still an early stage of the process.
What Happened to the CLARITY Act?
The timing is important.
After the Senate failed to advance the CLARITY Act in a procedural vote, the future of the legislation became increasingly uncertain.
Following the vote, the heads of the SEC and CFTC indicated that the two agencies were prepared to continue working together on crypto regulation using their existing authority.
The goal would be to provide the industry with clearer rules even if Congress ultimately fails to pass the legislation.
CFTC Chairman Mike Selig also said after the vote that the agency was ready to move forward with rules for what he described as a “new financial frontier.”
The latest CFTC filing appears to be another step in that direction.
SEC Is Moving Too
The CFTC’s proposal also comes shortly after a significant move from the SEC.
On Thursday, the SEC introduced an “innovation exemption” that provides qualified platforms with a five-year pathway to offer on-chain trading of certain tokenized stocks without registering as traditional securities exchanges.
That move shows that both agencies are already using their existing powers to address parts of the crypto and blockchain markets.
The two regulators have said they intend to continue coordinating their efforts rather than waiting indefinitely for Congress to establish a complete framework.
CFTC Opens the Door for Crypto Software
The CFTC also took another step toward expanding access to regulated derivatives markets on Friday.
The agency issued a no-action letter allowing certain software providers to connect users with regulated derivatives markets without registering as introducing brokers.
The exemption covers passive software that allows users to view markets and send orders directly to registered firms, including through crypto wallets.
There are still important limitations.
Software providers can promote specific contracts and receive transaction-based compensation, but they cannot custody customer assets, generate buy or sell signals, or control how orders are routed or executed.
The relief also comes with conditions, including risk disclosures, recordkeeping and compliance with marketing requirements.
The Bigger Picture
The U.S. crypto regulatory landscape is now developing on two tracks.
Congress is still trying to establish a broader legislative framework through the CLARITY Act, while the SEC and CFTC are increasingly using their existing authority to create rules and exemptions themselves.
The CFTC’s latest submission does not mean new crypto rules are already in effect.
There is still a review process, a CFTC vote and a public-comment period ahead.
But the direction is becoming clearer.
Even with Congress stalled, U.S. regulators are continuing to build a regulatory framework for crypto — one rule and exemption at a time.