CFTC Unveils Leveraged Crypto Trading Framework as FinCEN Drops Wallet Rules

CFTC Opens a Federal Path for Leveraged Retail Crypto Trading

The CFTC launched a rulemaking to create a federal framework for leveraged and margined retail crypto trading. At its center is a proposed new registration category called a "crypto asset market," which would let qualifying exchanges offer such products under one national regime. The proposals are known as Regulation CTX and Regulation CAM.

For US traders, the main change is the alternative to today's patchwork of state-by-state licensing. Exchanges that register could serve retail customers under uniform federal standards, including consumer protections and oversight of how leveraged products are offered.

There is a clear limit, though. CFTC Chairman Michael Selig said the agency cannot require crypto assets to trade on CFTC-registered platforms without congressional action. The framework would therefore be an option, not a mandate. That is the key difference from the Clarity Act, which would have set such requirements in law.

Why the Agencies Are Moving Without Congress

The timing follows the Clarity Act's failure to pass the Senate in September, which was widely seen as the industry's biggest legislative setback this year. Regulators have since moved ahead on their own. The SEC released its long-awaited innovation exemption in mid-September, and the CFTC had already sent its crypto asset rulemaking to the White House.

Selig described the proposal as part of an effort to keep America at the forefront of digital assets. He also said the Commission's approach should focus on preventing fraud, citing schemes like FTX, rather than only prosecuting it after the fact.

FinCEN Withdraws the Unhosted Wallet and Mixer Proposals

The second story concerns the Treasury. On October 5, FinCEN announced it was withdrawing two proposals and would take no further action on them.

The first dates to December 2020. It would have required banks and money services businesses to keep records on certain transactions with unhosted wallets above $3,000 and to report those above $10,000. It also called for verifying customer and counterparty information.

The second is a 2023 proposal under Section 311 of the USA PATRIOT Act. It would have designated crypto mixing as a class of transactions of primary money laundering concern. FinCEN said commenters had warned that its broad definition of mixing could chill legitimate activity and burden financial institutions. The agency framed the withdrawals as part of the administration's deregulatory agenda and its effort to make digital asset rules fit for purpose. Formal Federal Register publication of the notices was scheduled for October 6.

What It Means for Self-Custody Users and the Industry

For people who hold their own keys, the immediate effect is relief. Banks and exchanges will not have to build the verification and reporting systems the 2020 proposal described, so no new federal rule forces them to identify the owner of a private wallet just because a customer sends funds there. Industry groups that had opposed the proposals welcomed the decision.

Existing anti-money laundering obligations remain in place, including the Bank Secrecy Act. If Treasury later wants narrower rules, it would have to issue a new proposal and open it to public comment. The withdrawal is a halt to expansion, not a repeal of the existing regime.

The Bottom Line

The CFTC's proposal is only a proposal. It will go through public comment, and its reach is limited without legislation. FinCEN's withdrawal, by contrast, removes two concrete compliance threats at once. Together they point to a US approach that favors defined federal pathways and lighter-touch rules, with Congress's role still unresolved.