CFTC Chairman Michael Selig said on Wednesday that only federally regulated crypto exchanges will be able to offer leveraged trading to US customers under the agency’s proposed rules, and that the 100x multipliers common on offshore platforms sit in the same category as conduct the US has long banned. The remark, reported by Cointelegraph, marks the sharpest line yet drawn around the framework the CFTC opened for public comment earlier this week.
The comment lands on top of an advance notice of proposed rulemaking published October 5, seeking feedback on two draft rule sets: Regulation CTX, which covers leveraged, margined and financed crypto transactions for retail customers, and Regulation CAM, a new registration category called a crypto asset market. The comment window runs 60 days from Federal Register publication. No obligation starts today, and no exchange is required to register.
Leverage becomes a licensed activity
Selig’s framing changes the question from which products are allowed to who is allowed to sell them. Under the proposed approach, offering margined or leveraged crypto trading becomes a permission reserved for exchanges holding federal registration. Everyone else, by implication, is selling an unlicensed product to US users, whatever offshore licenses they hold and however legitimate they look in their home jurisdictions.
His comparison to offshore 100x venues is the operative part. By saying those multipliers “will be no different” from conduct the US has always prohibited, Selig signals the agency does not treat high offshore leverage as a regulatory gray area waiting for new rules. In his reading, it was already outside the law, and the framework simply names where leverage can legally exist inside the United States.
Much of the retail leverage in crypto today runs through venues registered outside the country. Domestic exchanges have generally capped or avoided the aggressive multipliers common on international derivatives platforms, largely because the legal footing was uncertain. Selig’s statement resolves that ambiguity in one direction: against high offshore leverage, not in favor of it.
How the proposed rules work
A draft of the notice describes a structure where registered futures commission merchants sit between customers and the exchange, a model borrowed directly from futures brokerage. Trades would carry Bank Secrecy Act checks against money laundering. A carve-out would keep deals that settle within 28 days outside the rules, treating them as actual delivery, a principle commodity law has carried for decades. The draft proposes a simpler test than a 2020 guidance the agency has since withdrawn: delivery to the customer’s own external, non-custodial wallet within 28 days would generally qualify. Most centralized platforms would fail that test, because coins bought with borrowed funds typically stay in exchange custody as collateral, so nothing reaches a wallet the customer controls.
Platforms registered as crypto asset markets would face anti-manipulation rules and proof-of-reserves checks on pooled customer funds held in omnibus accounts. The CFTC is not setting a leverage cap in the draft, leaving that fight to a later round. The notice also asks whether exchanges listing an asset for leveraged trading should assess how susceptible the token is to manipulation, looking at token distribution, ownership concentration, lockups, vesting schedules, programmatic issuance and buybacks. For smaller tokens that is a higher bar than simple liquidity, and several mid-cap listings could fall short of it.
The Commission published release 9307-26, describing a period of public comment, then a proposed rule for a second round of comments, then a final rule. That timeline runs past the November midterm elections, which fall in the middle of the comment period rather than after it.
Where the rules stop
The drafts reach only leveraged and financed trades. Plain spot buying and selling of bitcoin or ether stays under state money-transmitter licenses, the same patchwork as today. The CFTC retains only its fraud and manipulation powers over spot activity, and the agency’s own notice points at that gap. The Clarity Act would have handed the agency direct authority over spot exchanges, a power it cannot grant itself. The Senate failed to advance the bill on a cloture vote in September, with 49 in favor and 50 against and no Democrat voting to proceed.
Selig told Fox Business that exchanges will be able to register with the CFTC to protect spot markets, drawing a direct line to a real failure. “Four years ago, we saw the collapse of Sam Bankman-Fried’s FTX, where he stole over $8 billion in customer funds. That can’t happen under our regime,” he said Wednesday.
Blockchain Association CEO Summer Mersinger welcomed the notice but flagged the durability problem: agency rules can be rewritten by a future chair, and the agency’s legal reading can be challenged in court. Selig concedes that point in his own notice, writing that agency action cannot substitute indefinitely for a statute Congress would need to pass. He called the notice “just the beginning.”
What it means for exchanges and traders
For US platforms, the CAM category offers a route back into retail leverage, a business that mostly moved offshore years ago after enforcement actions and legal uncertainty. The trade-off is operating under a compliance model shaped more like a futures exchange than a crypto app: capital requirements funded and staffed through registered intermediaries, customer asset segregation, reporting and supervision.
For retail traders, margin could become available onshore with protections that are optional today, from segregated funds to minimum capital backing the venue. The counterweight is reach. Tokens with concentrated ownership or heavy unlock schedules may not clear the manipulation review, which would narrow the list of assets you can trade on margin. How exchanges choose between federal registration and their existing state licenses will become visible once final rules are written, not before.
Industry political spending is also a factor. Crypto groups have put more than $300 million into recent election cycles, and Reuters reports major industry organizations retain substantial funds for 2026. The next Congress may return to market-structure legislation before the CFTC finishes its two-stage rulemaking, which would reshape the framework the agency is currently building.
The public comment window closes roughly 60 days after Federal Register publication. After that, the agency must still publish a concrete proposed rule and hold a second comment round. Whatever leverage limits land in the final text will be written then, not now.