On October 5, 2026, the Commodity Futures Trading Commission (the “CFTC”) released an Advanced Notice of Proposed Rulemaking (“ANPRM”), as approved by the Commission and subject to pre-publication technical corrections, seeking comment on a potential comprehensive, tailored framework for retail commodity transactions involving crypto assets (“CTXs”) under Section 2(c)(2)(D) of the Commodity Exchange Act (“CEA”). The action comes as the Senate failed to invoke cloture on the Digital Asset Market Clarity Act of 2025 (the “CLARITY Act”) on September 15, 2026, and as the Securities and Exchange Commission (the “SEC”) advances its own digital-asset framework through Regulation Crypto Assets and temporary exemptive relief for tokenized securities venues (“TSVs”). Together, the CFTC and SEC actions indicate that, in the near term, agency rulemaking and exemptive action will play an increasingly significant role in shaping the regulatory landscape for digital assets as comprehensive legislation remains uncertain.

Legislative Backdrop

The House passed the CLARITY Act (H.R. 3633) in July 2025 with bipartisan support, but the Senate failed to invoke cloture on September 15, 2026, by a 49–50 vote, with forty-four (44) Democrats, two (2) Independents and four (4) Republicans voting against it, and one (1) Democrat not voting. The bill would have established a federal digital-asset framework but stalled amid disputes concerning official conflicts of interest, law-enforcement concerns regarding noncustodial developers, and banking group concerns regarding stablecoin yield. With the Senate not scheduled to return to legislative business until November 9 and the 119th Congress nearing its end, the bill is unlikely to see further action and would need to be reintroduced after the new Congress convenes in January 2027.

CFTC Developments

On October 5, 2026, the CFTC began a formal rulemaking process by seeking public comment before drafting rules governing retail crypto asset trading. The ANPRM covers transactions in crypto assets that fall under CEA Section 2(c)(2)(D) and asks how a tailored set of rules for that activity should be designed. Because it is an advanced notice, it frames questions rather than proposing regulatory text, and any binding requirements would need to be adopted through subsequent rulemaking.

On September 17, the CFTC submitted Regulation Crypto Asset Transactions (“Regulation CTX”) and Regulation Crypto Asset Markets (“Regulation CAM”) to the White House Office of Information and Regulatory Affairs for review, which concluded on October 2. The October 5 ANPRM then publicly outlined the CFTC’s contemplated framework for Regulation CTX and Regulation CAM, using its existing CEA authorities.

CFTC Chairman Michael S. Selig described the action as “a critical step in the CFTC’s ongoing efforts to ensure America remains the crypto capital of the world” and said “[t]he American people deserve clarity, certainty, and consumer protections.” He stated that the Commission intends to “incorporat[e] crypto asset transactions into its uniform national market regulatory framework” and “to establish regulations that are designed to prevent, rather than only prosecute after the fact, fraudulent schemes such as FTX.”

Requests for Comment on the ANPRM

The ANPRM states that the Commission’s statutory mandates require it to consider, and solicit comment on, among other matters: (i) clarifying how market participants may elect to conduct business in crypto asset markets under a uniform set of regulations that provides a national regime for CTXs, while preserving access to other markets; (ii) providing crypto asset-specific contextual information regarding requirements and practices that the Commission has found to represent best-practice means of compliance; and (iii) codifying a subcategory of designated contract market registration, known as a crypto asset market, purpose-built for CTXs.

The contemplated Regulation CTX and Regulation CAM frameworks are intended to provide a “purpose-fit option for crypto-asset exchanges that wish to operate under a single federal market-regulatory scheme.” Unlike the CLARITY Act, the regulations would not require all crypto asset trading to occur on CFTC-registered platforms. Instead, the CFTC’s on-exchange requirement would apply where retail customers are offered leverage, margin, or financing, including trades the customer chooses to fully pay for, but only until the customer takes actual delivery of the crypto asset (for example, by transfer to a wallet the customer controls). Once actual delivery occurs, the CFTC preliminarily believes the transaction falls outside the on-exchange requirement, subject only to the CFTC’s antifraud and antimanipulation authority. Chairman Selig stated the CFTC lacks authority to impose a mandatory CFTC-platform requirement without congressional action.

The ANPRM also leaves open how retail customers’ crypto assets would be protected if an intermediary fails. Among other questions, the CFTC asks whether existing futures commission merchant (“FCM”) segregation and 17 C.F.R. Part 190 bankruptcy rules work for CTXs, including whether uncleared CTXs would qualify as “commodity contracts” so that CTXs held by an FCM are treated as customer property, or whether Article 8 of the Uniform Commercial Code arrangement could serve as a substitute. Until these questions are resolved, the level of insolvency protection available to retail customers under the contemplated framework remains uncertain.

Comments must be in writing and received within 60 days after the ANPRM’s publication in the Federal Register. As of October 7, 2026, the ANPRM has not yet been published in the Federal Register.

SEC Developments

In August, the SEC proposed rules titled “Regulation Crypto Assets.” The proposal includes two exemptions from Securities Act registration requirements tailored to certain investment contracts involving crypto assets: a one-time “startup” exemption permitting offerings of up to $5 million during a four-year period, and a “fundraising” exemption permitting offerings of up to $75 million during each 12-month period. Under both exemptions, issuers would provide principles-based disclosures and remain subject to the antifraud and antimanipulation provisions of the federal securities laws. Issuers relying on the $75 million fundraising exemption would also be required to provide financial statements and be subject to ongoing reporting requirements. The proposal also includes a conditional safe harbor from the term “investment contract” in the definitions of “security” under the Securities Act of 1933 and the Securities Exchange Act of 1934: if the safe-harbor conditions are satisfied, a crypto asset would no longer be deemed subject to an investment contract. The proposed rules would also preempt state securities law registration and qualification requirements for certain offerings and secondary-market transactions. Public comments are due October 20, 2026.

In parallel with the CFTC’s regulatory initiative, the SEC issued an “Innovation Exemption,” granting temporary, conditional exemptive relief to TSVs from the Exchange Act definition of “exchange,” permitting them to trade tokenized National Market System (“NMS”) stocks using permissioned, innovative automated market makers and liquidity pools. The order also grants a temporary exemption from the Exchange Act definition of “dealer” for certain liquidity providers. Key conditions include symbol and volume limits; same-rights verification for tokenized stock; issuer notice and objection rights; auditable, public smart contracts on public, permissionless distributed ledgers; and coordinated trading halts with the underlying NMS stock. The exemptions are effective for five years, through September 17, 2031. SEC Chairman Paul Atkins linked the action directly to the CLARITY Act’s failure, stating that “Congress was unsuccessful in advancing the CLARITY Act” and that the SEC was taking a statutory-authority step to facilitate onchain trading.

Takeaways

• The ANPRM begins a formal CFTC rulemaking process to develop a comprehensive, fit-for-purpose framework for retail CTXs and markets under current CFTC authorities. The ANPRM does not itself establish new binding requirements but is intended to solicit market input to inform future digital asset rulemaking.


• Interested market participants should review the ANPRM and consider providing comments either directly or through their appropriate industry groups. Comments on the ANPRM must be submitted in writing within 60 days of its publication in the Federal Register.


• The SEC has proposed Regulation Crypto Assets and issued temporary exemptive relief to facilitate onchain trading by TSVs as part of its parallel effort to develop a regulatory framework for crypto assets under the federal securities laws. The Regulation Crypto Assets comment period is still open, and market participants have until October 20, 2026, to submit comments.


• Because the CFTC and SEC digital asset initiatives are being pursued through agency rulemaking and exemptive action rather than legislation, the resulting regulatory framework is more susceptible to modification by future Commissions than a framework established by Congress.


• The near-term prospect of digital asset legislation has dimmed with the failure of the CLARITY Act to advance in the Senate. An effort to develop a legislative framework for digital assets will need to begin again after a new Congress convenes in January 2027.

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