Summary

  • The CFTC has submitted a prerule titled "Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets" to the White House's OIRA for evaluation.
  • This early-stage prerule, which is not yet public, indicates the CFTC's intention to regulate crypto derivatives independently of Congress, particularly after the Clarity Act's recent Senate setback.
  • Both the CFTC and SEC are advancing with their initiatives: the SEC has introduced a new "innovation exemption" for tokenized stocks, while the CFTC has provided no-action relief for crypto trading applications.

The Commodity Futures Trading Commission (CFTC) is taking proactive steps to establish its own regulatory framework for cryptocurrencies, having sent two digital asset rule proposals to the White House for assessment shortly after the Clarity Act failed to pass in the Senate.

This week, a filing revealed that the CFTC has submitted a prerule named "Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets" to the Office of Information and Regulatory Affairs (OIRA), the White House body responsible for reviewing federal rules before they are published by agencies.

As this is a prerule, it signifies an initial stage in the rulemaking process rather than a conclusive regulation. The OIRA review is a necessary procedure that occurs before the public release of the text, which has not yet been disclosed, leaving the specific details unclear.

This action suggests that the CFTC is eager to create a regulatory framework for crypto derivatives on its own authority, rather than awaiting Congressional action. This urgency follows the failed cloture vote on the Clarity Act, a proposed market-structure legislation that aimed to set federal regulations for digital assets and delineate oversight responsibilities between the CFTC and the Securities and Exchange Commission (SEC).

The bill did not secure the 60 votes required for advancement, leading lead negotiator Senator Cynthia Lummis to declare its prospects nearly dead for the year, although some have indicated plans to continue pushing the bill despite the tight legislative schedule ahead of the midterm elections.

Meanwhile, both regulatory bodies, the CFTC and SEC, are making moves to ensure progress continues in the absence of the Clarity Act.

In the wake of the bill's failure, regulators have intensified their crypto initiatives. The SEC recently launched an "innovation exemption" allowing eligible venues to trade tokenized U.S. stocks directly on blockchain networks without needing to register as national exchanges.

Additionally, the CFTC has been active in other areas, recently issuing no-action relief that permits certain software providers, including crypto wallet applications, to give users access to regulated derivatives without having to register as introducing brokers.

Regulators view their current push for rulemaking as a pathway toward future legislation. Treasury Secretary Scott Bessent has previously mentioned agency rulemaking as a backup plan if the Clarity Act does not progress, making it the closest thing to a regulatory timeline available to U.S. crypto markets at this time.