The US Commodity Futures Trading Commission (CFTC or the Commission) has issued an advance notice of proposed rulemaking (ANPRM) that lays out a potential federal market structure for certain retail cryptoasset transactions (CTXs). The ANPRM would use Section 2(c)(2)(D) of the Commodity Exchange Act (CEA) as the statutory foundation for two contemplated rulemakings: Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM). The ANPRM does not presently contain proposed regulatory text; instead, it sets out preliminary interpretations and a detailed framework on which the Commission seeks public comment.[7]
One key feature is the jurisdictional theory. The CFTC generally does not have plenary authority to regulate cash or spot commodity markets.[8] Section 2(c)(2)(D), however, reaches retail commodity transactions that are entered into or offered on a leveraged, margined, or financed basis and subjects those transactions to specified provisions of the CEA as if the commodities were futures contracts. One of the most important in this context is the requirement that the transactions be offered or executed on a designated contract market (DCM) regulated by the CFTC. However, that requirement does not apply if the seller makes “actual delivery” of the commodity within 28 days.
In the ANPRM, the Commission preliminarily interprets the word “offer” to mean that an offer of leverage or financing may cause a transaction to fall within Section 2(c)(2)(D) even when the customer declines the financing but instead elects to trade on a fully paid basis. And if the purchased cryptoasset remains only as an internal book-entry on the exchange and “actual delivery” therefore has, according to the Commission, not occurred, the transaction could remain within the CFTC regulatory regime.[9] As a result, a trading platform would be able to register as a DCM and be regulated by the CFTC even with respect to its spot cryptoasset markets. The CFTC takes the preliminary view that if a trading platform does so register, it would no longer have to comply with state money-transmitter laws, because those would be preempted by the Commodity Exchange Act.
SECTION 2(C)(2)(D) AS THE STATUTORY FOUNDATION
Section 2(c)(2)(D) was added to the CEA by the Dodd-Frank Act in response to CFTC v. Zelener and concerns that firms could evade futures regulation through leveraged retail commodity contracts drafted as rolling spot transactions—so-called futures “lookalikes.”[10] Subject to statutory exceptions, Section 2(c)(2)(D)(i) applies to a commodity transaction that is entered into with or offered to a retail customer on a leveraged or margined basis or financed by the offeror, counterparty, or a person acting in concert with either. Section 2(c)(2)(D)(iii) then subjects covered transactions to certain CEA provisions “as if” they were futures contracts, including the Section 4(a) on-exchange trading requirement.
The CFTC emphasizes that this statutory structure was designed to prevent evasion without “interfer[ing] with the legitimate spot market.” A key statutory off-ramp is the actual-delivery exception, which excludes a contract of sale that results in actual delivery within 28 days or another period established by the Commission. In CFTC v. Monex, which involved leveraged trading of precious metals, the Ninth Circuit construed actual delivery to require real and immediate possession of the commodity, not a constructive delivery that leaves the commodity under the seller’s exclusive control.[11]
The ANPRM attempts to translate that framework to modern crypto markets. The Commission states that its prior enforcement-first approach did not provide a commercially workable way to list CTXs on regulated exchanges. Regulation CTX would therefore clarify which crypto transactions the Commission preliminarily views as covered by Section 2(c)(2)(D), while Regulation CAM would tailor the futures-market regulatory framework to those transactions.[12]
A BROAD READING OF ‘OFFER’ SERVES AS THE JURISDICTIONAL HOOK
The ANPRM’s notable feature is its preliminary interpretation that a covered offer of leverage, margin, or financing can attach to a transaction even if the customer elects not to use leverage. In the Commission’s view, the statutory phrase “offered (even if not entered into)” means that a retail customer who is eligible to accept a covered offer can execute a transaction subject to Section 2(c)(2)(D) even when the customer ultimately pays the full purchase price.
The Commission also reads “offer” at the platform level, not only transaction by transaction. It states that a covered offer could be contained in onboarding documents, exchange terms and conditions, or credit and margin documentation and could apply to every transaction available on an exchange, every transaction available through a customer account, or an entire product class. That approach makes platform architecture and customer documentation central to the jurisdictional analysis, and the availability of leverage may matter as much as whether leverage was actually used.[13]
The proposal would also reach certain third-party financing arrangements. The Commission preliminarily reads the statutory phrase “acting in concert” to encompass financing facilitated, arranged, endorsed, or materially assisted by the offeror or counterparty, including arrangements introduced through the exchange’s marketing, subject to revenue sharing, accessed through an exchange-operated financing platform, or involving financing terms influenced by the exchange.
The practical consequence is that a centralized crypto exchange that makes a platform-wide covered offer to retail customers could bring not only leveraged purchases but also fully paid purchases within Section 2(c)(2)(D), unless the “actual delivery” exception applies. Because covered transactions must satisfy the CEA’s on-exchange requirement, an exchange engaging in those activities would need a DCM pathway, including the contemplated CAM registration, rather than relying solely on state money-transmission or crypto licensing regimes.
At the same time, the CFTC does not claim general spot-market authority. The ANPRM states that Congress did not grant the Commission authority to regulate genuine cash-market retail commodity transactions and asks whether exchanges should have a commercially viable route to remain in the state-regulated spot market by not offering CTXs. The scope of “offer” therefore does double work: it is the Commission’s jurisdictional hook for regulated CTXs and, conversely, the boundary that may allow an exchange to stay outside the new federal framework if it does not make covered offers.[14]
ACTUAL DELIVERY: WHEN CFTC JURISDICTION FALLS AWAY
The breadth of the offer theory makes actual delivery critical. Consistent with judicial and CFTC precedent, the Commission preliminarily believes that actual delivery of a cryptoasset requires a meaningful degree of possession or control. Depending on the asset, that could mean possession of the private key or other credentials necessary to control the relevant wallet or account. If the asset conveys governance or staking rights, the Commission suggests that actual delivery may also require unfettered access to those rights, such as the ability to participate directly in governance or staking without being dependent on an intermediary.
By contrast, where a customer’s fully paid purchase is reflected only as an internal book-entry on an exchange, the Commission preliminarily believes actual delivery has not occurred. The transaction therefore remains a fully paid, open CTX subject to the CEA until actual delivery occurs. The ANPRM states that, after actual delivery, the Commission would no longer have jurisdiction over the asset under Section 2(c)(2)(D), apart from its anti-fraud and anti-manipulation authority.[15]
That distinction may create a difference between centralized custodial exchanges and certain onchain protocols. The Commission preliminarily understands that transactions executed through onchain trading protocols typically settle directly to a purchaser’s wallet in a manner that may constitute actual delivery under Section 2(c)(2)(D). In a departure from earlier interpretations, the Commission states that the existence of a lien or security interest does not necessarily prevent a purchaser from obtaining the necessary possession or control. These points remain subject to comment and may be important in determining how the final framework treats DeFi and other onchain models.[16]
REGULATION CAM: A PURPOSE-BUILT FEDERAL MARKET STRUCTURE
Regulation CAM would create a tailored subcategory of DCM designation for trading facilities that list only CTXs. A CAM would remain a DCM under Section 5 of the CEA, but it would comply with a tailored set of regulations implementing the statutory DCM core principles. The Commission also intends to preserve a path for existing DCMs to list CTXs without requiring a separate CAM registration, potentially with targeted relief to address CTX-specific issues.
The Commission is expressly considering integrated structures that look more like current crypto exchanges than traditional futures-market structures. Under the contemplated model, a CAM could also register as a futures commission merchant (FCM), a derivatives clearing organization (DCO), or both, or affiliate with separately registered FCM and DCO entities. Appendix A to the ANPRM illustrates a fully integrated CAM, CAM-DCO dual registration, CAM-FCM dual registration, traditional DCM participation, and onchain activity that may fall outside the framework through actual delivery.[17]
FCM INTERMEDIATION, LEVERAGE PROVIDERS, AND THE CAM MARGIN REGIME
The contemplated framework would require FCM intermediation of all CTXs. The Commission proposes a modified FCM CTX regime intended to preserve core customer protections while addressing the custody and operational realities of crypto markets. It also seeks comment on whether to create a limited-purpose FCM registration category for firms that intermediate only CTXs. The Commission proposes to tailor traditional DCM, FCM, and DCO requirements to crypto market realities, including 24/7 trading, blockchain-based execution and recordkeeping, forks and oracle failures, proof-of-reserves practices, smart contracts, continuous margining and auto-liquidation, custody, segregation, and insolvency treatment.
Retail leverage would be available only through an “eligible leverage provider,” either an FCM or a qualified banking institution sponsored by an FCM. Each leverage arrangement would be enumerated in the CAM’s rulebook. A sponsored bank would be required to provide a written representation that it will comply with the FCM rules applicable to leverage arrangements. Financing would generally be extended under bilateral agreements and used to purchase the cryptoasset, with the resulting leveraged position subject to margin and liquidation requirements.[18]
Beyond the basic CAM architecture, the ANPRM seeks comment on how existing DCM, FCM, and DCO requirements should be tailored to crypto markets, including listing and surveillance standards, 24/7 trading, blockchain-based execution and recordkeeping, operational safeguards, margin and collateral, customer-asset custody and segregation, clearing, and insolvency treatment. The Commission leaves many of those details open for future rulemaking.
CLEARING, CUSTOMER PROPERTY, AND INSOLVENCY
The ANPRM recognizes that a CTX may combine a spot purchase with a separate financing agreement, which does not map neatly onto traditional futures clearing. For the spot CTX leg, the Commission asks whether internal settlement can sufficiently mitigate counterparty and credit risk without a conventional DCO novation process. For leveraged positions, it asks whether a DCO could provide a more limited guaranty rather than the full mutualized guarantee associated with traditional futures clearing.
Customer property and insolvency are among the key unresolved issues. The Commission seeks comment on whether CTX assets should be held in Section 4d segregated accounts, how FCM custody should work with crypto custodians, how Part 190 and the Bankruptcy Code would apply, and whether UCC Article 8 arrangements could provide an alternative foundation for certain insolvency protections. It also contemplates customer disclosures describing how platform or intermediary insolvency would affect customer assets.[19]
FEDERAL-STATE BOUNDARY AND OTHER OPEN QUESTIONS
The ANPRM suggests that, once CTXs are brought onto CFTC-registered markets, the federal framework should operate as a uniform national regime. The Commission preliminarily believes that varying state laws should not apply to the operation of trading facilities that offer CTXs, while acknowledging that genuine spot markets may remain subject to state regimes. This potential preemption boundary, particularly for an integrated platform that offers both covered CTXs and genuine spot transactions, is likely to be a significant subject of comment.[20]
The Commission also asks whether to provide a de minimis exemption from CAM registration for facilities with limited CTX trading volume or leveraged positions, how to address cryptoassets that may be securities or subject to an investment contract, and how non-fungible tokens fit within the CEA’s commodity definition. Those questions underscore that Regulation CAM would not resolve every crypto classification issue and would need to operate alongside the SEC’s framework and other federal and state regimes.[21]
LOOKING AHEAD
The ANPRM marks a step toward a federal market-structure option for retail crypto trading, but the details remain open. Comments are due 60 days following the publication of the ANPRM in the Federal Register, and the CFTC has stated the comments will inform future rulemaking.
Crypto exchanges should consider reviewing their customer agreements, margin and credit features, affiliate and third-party financing arrangements, custody model, and settlement mechanics against the Commission’s preliminary concepts of covered offers and actual delivery. Existing DCMs, FCMs, DCOs, banking institutions, custodians, and onchain protocol developers likewise have a direct interest in the details of the contemplated CAM regime, particularly where the ANPRM asks whether legacy requirements should be modified or replaced with crypto-specific alternatives.
The breadth of the Commission’s offer-based jurisdictional theory is likely to be a central issue in the rulemaking. If adopted substantially as described, the framework could create a durable route for centralized exchanges to conduct retail spot transactions, with or without leverage, under comprehensive federal oversight while preserving a separate state-regulated lane for traditional spot activity. The precise boundary between those lanes will depend on how the Commission ultimately defines an “offer,” “actual delivery,” and the obligations that attach to a CAM.
