CFTC Proposes Crypto Rules Inspired by FTX's $8B Failure

The Commodity Futures Trading Commission (CFTC) on Monday kicked off a public comment period for voluntary crypto trading rules. Chairman Michael Selig pointed to the FTX case, where founders misappropriated around $8 billion in customer funds.

The agency oversees futures and other bets on commodity prices. Yet the sole FTX unit it regulated safeguarded client money, while roughly 130 affiliated firms went bankrupt.

What the CFTC Wants to Regulate in Crypto Trading

The notice is an initial step requesting public input before any regulation is drafted. It addresses retail crypto transactions made with borrowed money or financing from the platform.

Federal law already requires such deals to occur on a CFTC-regulated exchange. The agency now seeks crypto-specific rules, including a new exchange category called a “crypto asset market.”

“Under my leadership, the Commission will take every necessary step to establish regulations that are designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX,” Selig wrote.

Selig's announcement referred to a previous CNBC article about FTX’s $32 billion valuation.

The lesson from FTX’s failure should have been obvious. America shouldn’t have to choose between responsible innovation in crypto and protecting market participants from fraud and abuse. It needs prophylactic rules that reasonably ensure both. Today, the @CFTC is taking action to… https://t.co/7vm8o1Wrt6

— Mike Selig (@ChairmanSelig) October 5, 2026

What Exchanges Gain and Give Up by Signing Up

In a Wall Street Journal op-ed, Selig said the rules would not force crypto onto CFTC platforms. The agency lacks that authority without Congress, where the stalled CLARITY Act failed in the Senate.

Selig's proposal is as follows:

• Registered exchanges could offer retail traders leverage and margin, whereas state money transmitter licenses, like those FTX used, forbid it.

In exchange, according to the notice:

• Registered exchanges must segregate customer funds
• Monitor for market manipulation
• Restrict conflicts of interest.

Bitnomial has claimed it is the first US crypto-native exchange to hold all three CFTC licenses for this business. It began offering leveraged retail spot crypto trading in December 2025.

In April, Kraken parent Payward agreed to buy Bitnomial for up to $550 million. It then intended to use Bitnomial to offer a Hyperliquid-style service to US clients, subject to approval. Hyperliquid, an offshore platform, bars US users.

Comments are due 60 days after the notice appears in the Federal Register. A formal proposal and final vote must follow before any rule binds.