CFTC chair: write the rules first, enforce second

CFTC Chairman Michael Selig has given the clearest account so far of how crypto will be regulated without a new law from Congress. Speaking at Fordham Law's Blockchain Regulatory Symposium in New York on October 5, he explained the agency's new rulemaking, Crypto Times reported.

The division he described is simple. Leveraged retail trading would come under CFTC rules, with futures commission merchants handling customer accounts. Spot exchanges would stay where they are, under state money-transmission law. He also raised the idea of listing standards written for crypto, covering how a token is distributed and how exposed it is to manipulation.

Selig framed the approach as a matter of timing. He cited the collapse of FTX to argue that rules written in advance protect retail customers better than enforcement after the fact.

The map has an obvious gap. Leverage becomes federal while spot trading stays with the states, so ordinary buying and selling remains under the state-by-state licensing the industry has long complained about.

Nothing here is quick. The notice is an advance notice of proposed rulemaking, the earliest formal stage. A proposed rule comes next, then a final one. The law firm Troutman Pepper Locke does not expect a binding rule before late 2027, which leaves time for Congress to return to the subject first.