Three weeks after the U.S. Senate voted 49–50 to block the Clarity Act on September 15, both the Securities and Exchange Commission and the Commodity Futures Trading Commission published parallel crypto rulemaking proposals. The SEC moved first on October 1, proposing a custody framework for regi...
"Today's action is a critical step in the CFTC's ongoing efforts to ensure America remains the crypto capital of the world." — Michael S. Selig, Chairman, U.S. Commodity Futures Trading Commission
Three weeks after the U.S. Senate voted 49–50 to block the Clarity Act on September 15, both the Securities and Exchange Commission and the Commodity Futures Trading Commission published parallel crypto rulemaking proposals. The SEC moved first on October 1, proposing a custody framework for registered investment advisers and regulated funds. The CFTC followed on October 5, releasing an advance notice of proposed rulemaking for two complementary regimes — Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM) — targeting leveraged retail crypto trading and the exchanges that facilitate it.
The combined proposals represent the most significant coordinated federal action on crypto regulation since the rescission of SAB 121 in January 2025. They arrive against a backdrop of an $18.63 trillion derivatives quarter in Q1 2026, over $14 trillion in offshore perpetual futures volume between July 2025 and February 2026, and a crypto market that has continued to grow without a unified federal rulebook.
The Clarity Act, which would have divided crypto oversight between the SEC and CFTC and established registration requirements for digital asset platforms, failed on a procedural cloture vote in the Senate on September 15, 2026. The 49–50 vote fell short of the 60 votes required to advance debate.
According to reporting from NPR, CNBC, and CoinDesk, the bill collapsed over two issues unrelated to securities classification: Democratic objections to provisions they deemed insufficient to prevent a sitting president from profiting from digital assets, and community bank opposition to stablecoin reward structures. Republican leaders had released a revised version addressing ethics restrictions the day before the vote.
CFTC Chairman Selig addressed the failure directly: "I'm disappointed that Congress failed to deliver the Clarity Act to the President's desk. But President Trump promised to deliver a crypto asset regulatory market structure with or without legislation, and we will help him deliver it using our existing statutory authorities."
The legislative failure set the clock running. Within 16 days, the SEC published its custody proposal. Within 20 days, the CFTC followed with its market-structure framework.
The CFTC's October 5 advance notice of proposed rulemaking introduces a two-part framework that would create a new federal registration category for crypto exchanges offering leveraged, margined, or financed products.
Regulation CTX establishes definitions and rules for crypto asset transactions involving leverage, margin, or financing. Under this framework, exchanges offering such products to retail customers would be required to register with the CFTC rather than operating under state money-transmitter licenses. The regulation mandates that futures commission merchants (FCMs) intermediate retail customer accounts — a structural requirement that imports traditional derivatives market protections into crypto.
Regulation CAM creates a new registration category called a "crypto asset market" (CAM), subject to statutory core principles covering contract terms, market surveillance, and financial integrity. The framework includes:
The structure mirrors the U.S. banking system's state-versus-federal charter model. Spot crypto exchanges that do not offer leveraged products can continue operating under state money-transmission licenses. Platforms offering margin or leverage would have the option to register federally under the CAM framework. This is opt-in, not mandatory — without congressional action, the CFTC cannot compel spot-market registration.
Chairman Selig framed the initiative as preventive rather than punitive, stating the rules aim to "prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX." A separate framework within the proposal addresses on-chain developers who publish software without soliciting orders or controlling execution, drawing a distinction between protocol developers and traditional intermediaries.
The public comment period runs 60 days.
Four days before the CFTC's announcement, the SEC published its own rulemaking on October 1, proposing tailored custody rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940.
SEC Chair Paul Atkins stated the proposal would "replace the grey of uncertainty created by custody rules crafted for a bygone era" with a "clear regulatory framework for the custody of crypto assets, giving investment advisers and funds a compliant pathway where none existed before."
The proposal's key provisions:
The proposal builds on the January 2025 rescission of Staff Accounting Bulletin No. 121, which had required custodians to record the full fair value of customer crypto assets as a balance-sheet liability. That rescission, formalized through SAB 122, removed the primary accounting barrier that had deterred banks from entering crypto custody.
The SEC's comment period also runs 60 days, meaning both agencies will be processing industry feedback on overlapping timelines. Chair Atkins indicated that the agency's crypto regulatory work is "not finished" and that additional proposals are forthcoming.
The federal push coincides with state regulators formalizing their own cooperative structures. On October 1, the Wyoming Division of Banking and the New York State Department of Financial Services announced a memorandum of understanding (MOU) to coordinate oversight of digital asset businesses.
The MOU covers entities operating in either or both states and includes:
The Wyoming-New York agreement is notable because it links the state most aggressively pursuing crypto-native regulation (Wyoming, which created the special-purpose depository institution charter) with the state that holds the most established crypto licensing regime (New York's BitLicense). The deal preserves each state's independent authority while eliminating duplicative review processes.
The largest unresolved question in the dual-agency proposal is spot-market oversight. The CFTC's authority extends to derivatives, leveraged products, and fraud enforcement in spot markets — but not to direct regulation of spot trading platforms. The SEC regulates securities, but most major crypto assets, including Bitcoin and Ethereum, are not classified as securities.
This leaves a gap. A retail investor buying Bitcoin with cash on a state-licensed exchange remains outside the scope of both proposed frameworks. The CFTC acknowledged this limitation in its proposal, noting that comprehensive spot-market regulation requires congressional action that the Clarity Act would have provided.
According to CoinDesk's analysis, the CFTC proposal would allow U.S. crypto exchanges to "opt into a federal regulatory regime instead of relying primarily on a patchwork of state money-transmitter licenses" — but only for their leveraged products. Spot trading remains governed by a 50-state licensing patchwork.
Several CFTC-registered designated contract markets already offer some crypto products, including Coinbase, Crypto.com, Bitnomial, and Gemini Titan (approved as a DCM in December 2025). The new CAM category would provide a separate, crypto-tailored registration path distinct from the traditional DCM framework.
The regulatory proposals target a market of substantial and growing scale. In Q1 2026, crypto derivatives volume reached $18.63 trillion against $1.94 trillion in spot volume, according to CoinGecko data. Derivatives accounted for roughly 77% of total crypto trading volume.
Between July 2025 and February 2026, offshore perpetual futures volume alone exceeded $14 trillion. Binance, Bybit, and OKX — all headquartered outside the United States — captured the majority of this volume. Binance processes approximately $15.5 billion in daily perpetual futures volume. On-chain, Hyperliquid alone posted $216.8 billion in 30-day perpetual futures volume as of early October 2026.
The CFTC's framework, if finalized, would create a regulated onshore alternative to this offshore volume. The proof-of-reserves and FCM intermediation requirements add compliance costs but also provide the regulatory clarity that institutional participants have cited as a prerequisite for entry.
Meanwhile, the SEC's custody framework addresses a different bottleneck: the $10.8 trillion U.S. registered investment adviser market. Advisers managing client portfolios have lacked a clear, SEC-sanctioned path to custody crypto assets. The October 1 proposal creates one, potentially unlocking new institutional capital flows into digital assets.
The simultaneous SEC and CFTC proposals represent an attempt to construct through rulemaking what Congress could not achieve through legislation. The approach has structural limits — neither agency can fully regulate spot crypto markets without new statutory authority. What the proposals do accomplish is narrowing two specific gaps: the absence of a federal framework for leveraged crypto trading, and the lack of clear custody rules for regulated investment funds.
The 60-day comment periods will test whether the industry, which spent years and hundreds of millions of dollars lobbying for comprehensive legislation, will accept a piecemeal regulatory approach that leaves spot markets in state-by-state limbo. The alternative — waiting for a new legislative cycle in 2027 — may prove less attractive than engaging with imperfect but actionable rulemaking.
The data is clear on one point: the volume exists. $18.63 trillion in quarterly derivatives trading, $14 trillion in offshore perpetual futures, and trillions in advisory assets under management constitute real economic activity awaiting regulatory clarity. The question is no longer whether U.S. regulators will act, but whether the framework they build will be sufficient to repatriate volume currently flowing through offshore venues.