The CFTC Wants to Rewrite the Rules for Crypto
Two proposed frameworks—CTX and CAM—could bring retail margin trading onshore and end the state-by-state licensing maze for exchanges.
By The crypto-money Desk
For years, U.S. crypto exchanges have been regulated largely like money transmitters—the same category as Western Union or your local currency exchange. [1] That framing made sense when Bitcoin was a novelty. It makes less sense when platforms are running national order books, matching trades across the country, and holding billions in customer funds.
The vehicle is a two-part proposal. Regulation Crypto Asset Transactions, or CTX, would let retail investors trade spot crypto with margin, leverage, and financing—capabilities long available at traditional brokerages and offshore exchanges but not at federally regulated U.S. platforms. [1] Users could borrow to take larger positions, using crypto they already own as collateral. [1]
The companion rule, Regulation Crypto Asset Markets (CAM), would create a new federal registration pathway for exchanges offering those transactions—allowing them to operate nationwide under CFTC oversight instead of navigating a patchwork of state licensing regimes. [1] Today, exchanges like Coinbase and Kraken must clear state-by-state hurdles for ordinary spot trading; New York's BitLicense is the notorious example. [1] Under CAM, that fragmentation ends—at least in theory.
The appeal is obvious. A single federal standard is cleaner than fifty competing ones, and it signals to institutional capital that the market has grown up. The harder question is whether consolidation carries its own risks.
That question has a name: FTX. When Alameda got access to customer funds and special treatment on the exchange, turning what should have been separate businesses into one spectacular failure, it became the cautionary tale for any regulator proposing to bring brokerage, exchange, and clearing activities closer together. [1] Selig's answer is that the federal framework would require safeguards to keep those responsibilities separate, protect customer funds, and prevent conflicts of interest—even when the businesses share a parent company. [1]
Both CTX and CAM remain in the early stages of rulemaking. [1] Whether that confidence survives legal challenge is another matter.
The second front is prediction markets. States argue that sports-event contracts offered by platforms like Kalshi are effectively gambling and belong under state gaming laws. [1] Selig's position is that the distinction isn't necessarily what people are betting on, but how those contracts are structured and traded. [1]
Courts have reached conflicting conclusions, and New Jersey has asked the Supreme Court to weigh in. [1] States continue to challenge the CFTC's authority, arguing the contracts are effectively gambling that should fall under state gaming laws; Selig argues that state gambling regulations weren't designed to oversee these types of markets, whereas federal rules governing financial exchanges offer protections better suited to them, including closer monitoring of trading activity and safeguards against insider trading and manipulation. [1] Neither side is backing down.
What connects crypto exchange reform and the prediction-market fight is a single underlying tension: whether national markets should answer to one federal standard or dozens of local ones. Selig is betting on federal consolidation. The states, and the courts, will have a say.
The goal, as Selig frames it, is to give exchanges more room to innovate without sacrificing the protections meant to prevent another FTX—an approach he believes can attract the bipartisan support needed for these rules to outlast the current administration. [1] Whether two early-stage rulemakings can accomplish that is the open question. The architecture is on paper; the stress test comes later.
The result is a fragmented market where what you can trade depends on where you live.Bankless