SEC, CFTC Push Ahead on Rules for Leveraged Crypto Trading as Joint Harmonization Effort Deepens
The wall separating America’s two top financial regulators keeps getting thinner. Over the past several weeks, the Securities and Exchange Commission and the Commodity Futures Trading Commission have pushed further into a shared project that could, for the first time, give leveraged and margined crypto trading a clearly defined home inside US-regulated markets.
A rulebook two agencies are writing together
CFTC Chairman Michael Selig used the agency’s first Innovation Advisory Committee meeting in Washington in late August to direct staff down two parallel tracks. One instructs CFTC lawyers to clarify how the “actual delivery” exception under the Commodity Exchange Act applies to leveraged, margined, or financed crypto trades, a question that determines whether such trades can legally happen off-exchange at all. The other asks staff to explore an entirely new registration category — a purpose-built version of the CFTC’s designated contract market framework, tailored specifically to retail crypto trading done on margin.
Neither track is a finished rule yet. Both are early-stage rulemaking directives, the kind of internal instruction that typically takes months to turn into a formal proposal open for public comment. But the direction is unmistakable: after years of leveraged crypto trading living almost entirely offshore, on platforms outside US jurisdiction, regulators are trying to build a legal on-ramp for it to happen at home instead.
Built on a foundation laid earlier this year
This isn’t a rulemaking effort that appeared out of nowhere. Selig and SEC Chairman Paul Atkins relaunched “Project Crypto” as a joint two-agency initiative back in late January, after years of the SEC and CFTC largely working in separate lanes on digital assets. That was followed in March by a formal Memorandum of Understanding — a “Joint Harmonization Initiative” co-led by the SEC’s Robert Teply and the CFTC’s Meghan Tente — that named six areas where the two regulators would try to align their rulebooks, including how margin and collateral requirements get modernized for crypto markets.
Atkins described that MOU at the time as “a roadmap for a new era of harmonization between the agencies,” while Selig framed the goal as working to “eliminate duplicative, burdensome rules and close gaps in regulation.” The leveraged-trading rulemaking now underway is one of the most concrete products of that broader effort so far.
A hedge against a stalled Congress
Selig has also been explicit that the CFTC isn’t waiting on lawmakers. With the CLARITY Act’s market-structure framework facing a difficult September 15 Senate vote, Selig has said that if the bill stalls, “the CFTC will utilize its existing authorities to begin establishing a regime for crypto asset markets.” In other words, the agencies are trying to build with existing statutory authority what Congress may or may not hand them through legislation — a bet that regulatory clarity on leveraged crypto trading arrives one way or another.
For traders, the practical effect if this rulemaking eventually lands would be leveraged crypto products offered through CFTC-registered venues, subject to margin and disclosure rules, rather than exclusively through offshore exchanges that fall outside any US regulator’s reach. That’s a meaningfully different risk profile — though it’s one that, as of now, remains a work in progress rather than a rule already on the books.
Crypto assets, including leveraged and margined products, remain highly volatile and carry substantial risk of loss. Nothing here is financial advice. Readers new to how margin and leverage work in crypto markets can start with the fundamentals in coin680’s Bitcoin Academy.