Overview

  • CFTC Chair Michael S. Selig is urging staff to draft regulations for the crypto market using existing powers.
  • If the Clarity Act is not passed, Selig intends to formally propose these rules.
  • The proposed regulations may address crypto exchanges, leveraged trading, and on-chain financial systems.

Michael S. Selig, the Chair of the Commodity Futures Trading Commission (CFTC), has instructed his team to initiate the creation of regulations for the crypto market structure. This move is intended to prepare the agency to implement rules if the Clarity Act does not advance in Congress.

During the first meeting of the CFTC's Innovation Advisory Committee on Thursday, Selig emphasized that bipartisan legislation regarding market structure is his preferred solution. However, he noted that if the bill remains stuck, the CFTC will leverage its current authority to establish a regulatory framework for cryptocurrency markets. He described the passing of this bipartisan bill as crucial for securing the industry's future.

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The Clarity Act aims to create a national framework for digital assets and clearly define the responsibilities of the CFTC and SEC in regulating crypto markets. Selig asserted that such legislation would make it more difficult for future administrations to reverse these regulations.

“Passing Clarity is the most effective means to prevent another Gary Gensler from conducting a campaign of legal intimidation against the individuals and companies present here today,” Selig remarked, referring to the former SEC chair known for initiating several costly lawsuits against crypto startups.

On Wednesday, former President Donald Trump called for Congress to approve a “fair version” of the Clarity Act. Nonetheless, Selig indicated that if Congress does not take action, the CFTC is ready to proceed independently.

“If Clarity continues to be delayed due to Democratic obstruction, the CFTC will utilize its existing powers to start forming a regulatory system for crypto asset markets,” he stated.

Selig has already tasked his staff with investigating what these regulations might entail.

“To facilitate this, I have instructed CFTC staff to begin looking into rules that would establish a CFTC market structure for crypto assets under the agency's current authorities,” he explained.

According to Selig's proposed framework, both current CFTC registrants and unregistered crypto exchanges could fall under CFTC supervision, allowing them to engage in leveraged or margined crypto trading with rules designed specifically for digital assets.

Additionally, Selig has directed staff to collaborate with developers of on-chain finance protocols to determine how they could operate legally within the United States.

“I've also tasked staff with working alongside developers of on-chain finance protocols to find ways for them to legally and compliantly offer their services in the United States, ensuring long-term protection for developers,” he noted, echoing comments made by Trump.

During a press conference with prominent crypto leaders on Wednesday, Trump mentioned that Selig is working on bringing the decentralized perpetual futures exchange Hyperliquid to the U.S.

Selig assured that the agency will allow Congress more time to pass the Clarity Act before taking further steps.

“You can count on me to instruct CFTC staff to swiftly propose these industry rules,” he stated.