The Commodity Futures Trading Commission (CFTC) is preparing to unilaterally codify crypto market rules if Congress fails to pass the stalled CLARITY Act, which faces opposition from Democratic Senators. Chairman Mike Selig has instructed staff to explore regulations that would allow the agency to grant Designated Contract Market licenses, enabling leveraged and margin trading. This move mirrors recent Securities and Exchange Commission (SEC) action on crypto fundraising. However, the plan faces legal challenges from the CME and state authorities, and industry leaders view agency-led guidelines as a temporary fix with inherent regulatory risks. Coinbase CEO Brian Armstrong noted that regulatory clarity is coming regardless of the legislative path.
U.S. regulators are preparing to fast-track cryptocurrency rules amid ongoing uncertainty surrounding the CLARITY Act. During a meeting with industry players on August 20, CFTC Chairman Mike Selig criticized Democratic Senators for stalling the legislation.
“If CLARITY continues to stall because of Democratic obstruction, the CFTC will utilize its existing authorities to begin establishing a regime for crypto asset markets,” Selig stated, adding, “We owe it to the American people to do so.” Selig reiterated that he has instructed CFTC staff to explore rules to codify the agency’s market structure for crypto assets.
“If we have to utilize that authority to create rules without the supporting legislation, we’ll do it,” he said. The move would allow the CFTC to grant current registrants and onchain protocols a Designated Contract Market license, enabling platforms to offer leveraged and margin trading in the U.S.
President Donald Trump recently confirmed that Hyperliquid was pursuing this U.S. pathway. The CFTC’s threat mirrors the Securities and Exchange Commission’s (SEC) recent action, which released a guideline for crypto fundraising via ICOs up to $75 million, a provision in the CLARITY Act.
For the CFTC, Selig wants control of crypto futures, pre-IPO perps, leveraged trading by onchain protocols, GPU futures, and prediction markets. However, the CME is already challenging the CFTC’s approval of crypto perpetual futures for Coinbase and Kalshi in court. The agency’s perceived authority over prediction markets is also being challenged by sports betting firms and state attorneys general.
The final verdict on these issues may depend on the Supreme Court. In short, agency-led guidelines not codified by Congress via legislation can be challenged or reversed. White House chief crypto advisor Patrick Witt supported the regulators’ plans, calling them pro-innovation and growth.
“Smart regulators like Mike Selig and SEC’s Paul Atkins understand that protecting consumers and market integrity doesn’t have to mean stifling growth and innovation,” Witt said. Coinbase CEO Brian Armstrong commented that regulatory clarity is coming regardless of the path taken, though the agency-led option is a temporary fix with its own regulatory risks.
