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The CFTC is moving ahead on crypto regulations without waiting for Congress, but its authority has hard limits that could leave millions of traders exposed. Understanding exactly where those limits fall determines whether the U.S. gets unified crypto oversight or…
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Mike Selig, chairman of the Commodity Futures Trading Commission (CFTC), told CNBC he was “absolutely disappointed in Congress” for failing to deliver crypto market legislation on October 6, 2026. In response, Selig said the CFTC would not wait for lawmakers and would proceed to establish CFTC crypto rules using its existing authority.
After the CLARITY Act failed in a Senate procedural vote in September, the CFTC quickly introduced two new proposals to regulate cryptocurrencies. Selig describes these proposals as a “federal option” for crypto exchanges. But how far can the CFTC go before it requires congressional approval, and what aspects still need new laws?
What the CFTC’s Two Proposed Crypto Rules Would Do
The Commodity Exchange Act established the CFTC and limits the agency’s rulemaking authority to the powers it grants. A CFTC rule has the force of law within those constraints, but any extension beyond them would require Congress to enact new legislation.
The first proposal, titled Regulation Crypto Asset Transactions, focuses on retail customers who trade cryptocurrencies using borrowed funds. This applies to futures commission merchants, firms that hold customer funds for futures trading. The second proposal, Regulation Crypto Asset Markets, explains how crypto platforms can register as a new type of federally regulated exchange. Notably, these proposals mentionBitcoin(CRYPTO: BTC) andXRP(CRYPTO: XRP) as among the covered digital assets.
The CFTC submitted these rulesto the White Housefor review on September 17. Once the rules are published in the Federal Register, the public will have 60 days to comment. After considering the feedback, the CFTC can revise the proposals and must hold another vote before any rules go into effect.
Why the CFTC Can’t Make Every Crypto Exchange Register
In anop-ed published on October 5, Selig clarified that the CFTC cannot require crypto to trade exclusively on federally registered platforms without congressional approval. This means exchanges that only facilitate spot trading—where customers buy cryptocurrencies outright using their own money—do not have to register with the federal agency and can continue operating under state licenses.
However, exchanges that want to offer retail customers leveraged or margined trading will need to register under the new category. This creates a split in the U.S. crypto market: customers using registered platforms will benefit from federal protections against market manipulation, conflicts of interest, and better fund protections, while those on unregistered platforms will rely solely on state regulations.
CFTC Crypto Rules Could Still Change Before They Take Effect
A proposal is not a final rule. The CFTC can revise its proposals based on public comments, and it has not yet set a timeline for final adoption. Furthermore, a future administration could reassess these rules, as an agency can change its own regulations, while only Congress can amend a law.
In parallel, the Securities and Exchange Commission (SEC) is progressing on its own front; on October 1, itproposed new custody rulesfor crypto. These would dictate how investment advisers and funds hold cryptocurrencies, including self-custody when a qualified custodian isn’t an option. The SEC’s proposal will also enter a 60-day public comment period once published.
What Do CFTC Crypto Rules Still Require From Congress?
Ultimately, only Congress can require all crypto exchanges serving U.S. customers to register with a federal regulator. While the CFTC can establish a federal framework and supervise leveraged retail trading, spot exchanges can still operate outside this framework, potentially leaving some traders with only state-level protections.
As the CFTC finalizes its rules, the focus will shift to which exchanges choose to register. If major U.S. crypto exchanges voluntarily register, the distinction between registered and unregistered platforms may decrease, even without new legislation. Conversely, if most platforms remain unregistered, the divide could persist until Congress passes a comprehensive market structure bill.
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Sam Daodu is a crypto analyst who’s spent nearly a decade making blockchain understandable—no easy task when most whitepapers read like fever dreams. He writes for 24/7 Wall St., covering Bitcoin, altcoins, and crypto market analysis for investors. Before crypto, he was a tech writer (back when explaining “the cloud” was peak innovation). Since 2018, he’s written for CoinTelegraph, Yahoo Finance, The Block, Cryptonews, Zypto, Rain, and more—basically anywhere people want crypto news without the headache. Sam runs MacLabs Marketing, a content agency for crypto brands tired of sounding like AI wrote their website. He also publishes free crypto education on his site for Web3 enthusiasts who think “gas fees” is a typo. When he’s not writing or staring at charts, Sam’s either: – Watching anime (currently convinced One Piece has better tokenomics than most altcoins) – At the gym sculpting himself into a Greek god – Listening to the music your mum warned you only bad boys listen to Connect: LinkedIn | Email | MacLabs Marketing
Source: 247wallst.com