CFTC Chair Mike Selig announced a new federal registration framework for crypto exchanges offering leveraged or margined trades to retail customers on Wednesday, citing the need to prevent collapses like FTX.
Speaking on Fox Business Network’s Varney & Co. show, Selig said the agency is seeking public comment on the framework this week. The proposal creates a federal registration category called “crypto asset market” for exchanges that offer leverage, margin, or financing on crypto trades to retail customers. Exchanges that do not offer leverage could continue operating under state licenses.
Selig pointed to FTX’s 2022 collapse as the regulatory impetus. “Four years ago, we saw the collapse of Sam Bankman-Fried’s FTX, where he stole over $8 billion in customer funds. That can’t happen under our regime,” Selig said. Bankman-Fried is serving 25 years in prison for fraud and other crimes.
The CFTC Chair emphasized that the agency’s existing segregation requirements protected customer funds at FTX’s CFTC-registered subsidiary. “Actually, Sam Bankman-Fried’s subsidiary that was CFTC registered, all the funds were safe and secure because they were segregated, and we have some of the most stringent requirements of any federal agency when it comes to markets, we want to bring that to the crypto world,” Selig said.
The CFTC interprets “leverage” broadly under the proposal. The framework potentially covers fully paid crypto trades unless customers take delivery of the underlying asset, expanding the scope of exchanges subject to federal registration.
The regulatory move reflects a shift since Donald Trump took office. Both the CFTC and Securities and Exchange Commission have adopted a friendlier approach to crypto regulation under the current administration. Lawmakers blocked the Clarity Act last month, leaving the CFTC to rely on existing statutory powers to regulate digital asset markets.
Selig, who previously served as chief counsel at the SEC’s Crypto Task Force, did not specify a timeline for finalizing the framework or detail the full scope of compliance requirements exchanges will face under the new category.
