CFTC Chairman Selig shared regulations on the structure of the cryptocurrency market

In an interview with Bloomberg, the Chairman of the Commodity Futures Trading Commission (CFTC), Michael Selig, stated that the cryptocurrency industry will certainly have regulations to structure its market, regardless of whether Congress passes the CLARITY Act.

8/24/20265 min read

Two Pathways and the Importance of the Difference

The approach through "rules" and "laws" that Selig refers to has specific implications within the framework of US administrative law; it determines the sustainability of the market structure being formed, as well as the speed of implementing or reversing those policies.

The issuance of regulations, based on the CFTC's existing authority—the "regulation adoption" roadmap—will allow the agency to draft and approve specific rules. These rules will govern how participants in the cryptocurrency spot market register, the legal obligations of trading platforms, the settlement mechanisms for stablecoins in the derivatives market, custody requirements for digital assets, and standards for regulating the event contract market (including prediction platforms).

The process of enacting regulations typically takes 12 to 24 months, from the notification of the draft regulation to its formal promulgation; this process includes mandatory steps such as public consultation, expert analysis by staff, and a vote of approval by the Committee. Regulations enacted in this manner can be reversed or modified by a succeeding administration through the same process; therefore, they have less stability than requirements enacted into law, but have the advantage of being implementable without parliamentary intervention.

The passage of legislation through Congress, the "legislation-passing" process, will incorporate market structure requirements into federal law. This makes regulations much harder to change, as repeal or amendment requires the approval of a majority vote in both houses of Congress as well as the President's signature. The CLARITY Act (as it currently stands) would divide supervisory authority between the CFTC and the SEC based on the degree of decentralization of each type of digital asset; it would also grant the CFTC the authority to regulate the spot market for assets classified as digital goods, as well as establish specific registration categories that exchanges and other market participants must comply with. A codified legal framework would also provide greater legal certainty for market participants compared to relying solely on regulatory guidance. This helps mitigate the legal risks that the CFTC's regulatory process might face from industry businesses, who could challenge the agency's regulatory authority in the absence of clear authorization from Congress.

Current status of the CLARITY Act

The Senate vote on the CLARITY Act – an event that Senate Majority Leader Thune had indicated would be scheduled after the recess – had yet to take place as of August 20th. The bill is facing an unresolved dispute over ethics regulations, an issue that prevented a vote before the August 7th recess. Cloture motion, scheduled to take effect on September 15th, would open the earliest possible procedural path to a Senate vote; however, securing the seven Democratic votes needed for the 60-vote threshold still depends on resolving the ethics regulations that would restrict senior officials from engaging in personal cryptocurrency business. This is the provision for which the White House has approved a specific version, but which Democrats argue is not sufficiently stringent.

Selig's description of the bill being "stalled" in the Senate amid "controversy over ethics regulations – which in part stems from President Donald Trump's involvement in this area" is the most frank admission yet from a senior regulatory official. This assessment reveals that the political issues surrounding the CLARITY Act are inextricably linked to Trump's personal cryptocurrency business interests. This perspective has set the regulatory landscape: the CFTC's current stance is to wait rather than act, reflecting a belief in a legislative path where the main uncertainty lies in ethics regulations, rather than core regulations on the capital market structure that receive bipartisan support.

Five specific cryptocurrency regulations that the CFTC is considering.

Selig's identification of five specific regulatory areas under review by the CFTC has provided the most detailed picture to date of the structure of the cryptocurrency market as shaped by the CFTC – with or without legislative intervention from Congress.

The registration requirements for participants in the cryptocurrency spot market will clearly define which entities (acting as intermediaries for digital asset transactions) must register with the CFTC and which category they belong to; thereby establishing a licensing framework that did not previously exist for the cryptocurrency spot market (except for registered derivatives exchanges). This is precisely the structural aspect of the market that the CLARITY Act addresses through legislation: creating a new registration category called "digital commodity exchanges" and establishing the necessary standards to achieve this designation.

The trading platform regulations will set the operating standards for places where cryptocurrency spot trading takes place, including requirements for market supervision, fair access, conflicts of interest, and disclosure – regulations that existing stock exchanges and futures exchanges are required to comply with. These requirements will extend operational supervision (equivalent to the level of supervision applied to CME Group and the NYSE) to cryptocurrency spot exchanges that are currently operating without equivalent legal obligations.

Regulations concerning stablecoins used in derivatives trading will address the specific link between the stablecoin market structure (which is currently governed by the GENIUS Act through banking regulators) and the CFTC's existing authority over derivatives clearing. When USDT or USDC are used as the settlement currency for futures or perpetual contracts regulated by the CFTC, the agency will have the authority to control how those financial instruments are used, even if it does not have direct authority over the stablecoin issuers themselves.

Assessment and Conclusion

Selig's August 20 statement asserts that the CFTC will not wait indefinitely for Congress before pushing forward its own cryptocurrency market structure framework if the CLARITY Act's legislative roadmap drags on beyond the administration's desired optimal implementation timeline. The five identified regulatory areas provide the industry with a clearer picture of the issues the CFTC-built market structure will address and the expected implementation sequence; among them, registration and regulation requirements for trading platforms are likely to be implemented before more complex standards related to stablecoins and custody services.

For market participants assessing compliance, the "regulation or legislation" approach means that the outcome of negotiations on the ethics provisions of the CLARITY Act will determine the implementation roadmap, rather than the core content of the market structure – the final element that will govern cryptocurrency trading, custody, and settlement activities in the United States. Both paths lead to the same regulatory goal: a legal framework addressing issues of registration, trading platform standards, stablecoin settlements, custody services, and event contracts; the difference between the two lies primarily in the timeframe and sustainability of the regulations enacted.

Disclaimer: The content in this article is for informational, research, data analysis, and reference purposes only regarding the cryptocurrency market. All opinions, assessments, forecasts, or opinions reflect the author's perspective at the time of publication and do not constitute investment advice, solicitations for buying or selling, trading recommendations, advertising, marketing, or promotion of any financial products, services, or cryptocurrencies. Mentions of projects, tokens, protocols, exchanges, wallets, or cryptocurrency service providers (CASPs) are for research, analysis, or informational purposes only and should not be construed as endorsements, recommendations, or guarantees in any way. HCCVenture does not broker, advertise, market, promote, or connect users in Vietnam with any cryptocurrency services from CASPs. HCCVenture does not accept asset custody, investment mandates, manage assets, or execute transactions on behalf of clients. All investment decisions are made entirely through the reader's own research (DYOR), evaluation, and responsibility; HCCVenture is not liable for any losses or damages arising from the use of or reliance on the information presented in this article.

Compiled and analyzed by HCCVenture

Join our information channels: https://link3.to/holdcoincventure

Explore HCCVenture group

Connect with us

Disclaimer: The information on this website is for informational purposes only and should not be considered investment advice. We are not responsible for any risks or losses arising from investment decisions based on the content here.

TERMS AND CONDITIONS • CUSTOMER PROTECTION POLICY

ANALYTICAL AND NEWS CONTENT IS COMPILED AND PROVIDED BY EXPERTS IN THE FIELD OF DIGITAL FINANCE AND BLOCKCHAIN BELONGING TO HCCVENTURE ORGANIZATION, INCLUDING OWNERSHIP OF THE CONTENT.

RESPONSIBLE FOR MANAGING ALL CONTENT AND ANALYSIS: HCCVENTURE FOUNDER - TRUONG MINH HUY

Read warnings about scams and phishing emails — REPORT A PROBLEM WITH OUR SITE.