CFTC Proposes New Rules for Crypto-Linked Market Structures

The U.S. Commodity Futures Trading Commission (CFTC) has proposed new rules to address how connected financial firms operate in the derivatives market. 

In a release published on Thursday, the agency said the proposal, which targets affiliations among CFTC-regulated entities, is intended to address potential conflicts of interest while allowing new market structures to develop.

The CFTC is seeking public comment on proposed changes to several existing rules, including Parts 37, 38, and 39 of its regulations, as well as Commission Regulations 1.52 and 1.55. The proposed changes focus on companies that play multiple roles across the financial system, especially as these structures become more common. 

Why the CFTC wants new guardrails

The CFTC said it has seen more affiliations between regulated entities such as derivatives clearing organizations, designated contract markets, swap execution facilities, and futures commission merchants. These firms have also become more connected with other market participants, including market makers. 

As companies take on more roles within the same market structure, regulators are paying closer attention to how these relationships could affect fairness, competition, and trust in financial markets. 

The CFTC’s proposal is focused on what it describes as vertically integrated market structures. This means a company or group of connected companies may control or provide different parts of a financial service, rather than focusing on only one area. The agency said it wants to create rules that help manage possible problems while avoiding unnecessary restrictions on businesses that are building new financial products and services. 

CFTC Chairman Michael S. Selig said the proposal is part of the agency’s effort to support responsible growth in U.S. derivatives markets. “By setting forth principles-based regulations for vertically integrated market structures, the CFTC is taking a significant step in our continued efforts to support responsible innovation in U.S. derivatives markets,” Selig said.

He added that the proposal would create “purpose-fit rules of the road” that improve market integrity without limiting new market structures or placing excessive compliance costs on registered firms. 

Digital asset markets remain under the spotlight

Regulators have continued reviewing how existing financial rules apply to emerging digital products, including crypto-related derivatives and blockchain-based markets.

Earlier this year, the CFTC launched a broader review to examine whether existing regulations still fit the changing financial landscape. The agencies asked for public feedback on whether current definitions and rules are still suitable as markets continue to develop. 

The CLARITY Act remains stuck in the Senate

The proposal comes as pressure continues to build on the US Senate to advance the Digital Asset Market CLARITY (CLARITY) Act. Lawmakers are still working on a broader crypto market structure bill, which aims to provide clearer rules for the crypto industry, but it remains delayed in the Senate. 

Earlier today, U.S. Treasury Secretary Scott Bessent urged lawmakers to move the legislation forward, saying it has already gone through enough discussions on the bill. 

However, the bill still faces procedural challenges. The Senate has not yet filed a cloture motion, a step required to advance the legislation. Even if lawmakers move forward, the bill could still face further debate, amendments, and voting procedures.

For the CFTC proposal, the public will have 60 days to submit comments after the notice is published in the Federal Register. The feedback period will allow industry participants and other stakeholders to share their views before the agency moves toward final rules. 

Also Read: Binance.US to Seek CFTC License for Prediction Markets in Comeback Bid

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