On October 13, 2026, the Commodity Futures Trading Commission published an advance notice of proposed rulemaking on crypto asset transactions and markets in the Federal Register. The notice appears at 91 FR 64811. Comments must be received on or before December 14, 2026. The document is an advance notice, not a proposed rule, and the Commission states its intent to develop fit-for-purpose rules implementing section 2(c)(2)(D) of the Commodity Exchange Act.
The headline is not a new federal license. It is a regulator saying, in print, that it plans to define terms in a statute that already applies to retail crypto leverage. For an exchange, broker or custodian, the useful reading starts with that statute, not with the rulemaking.
What section 2(c)(2)(D) already requires
The provision came from the Dodd-Frank Act, which amended the Commodity Exchange Act on July 21, 2010. Its first limb covers, unless an exception applies, any agreement, contract or transaction in any commodity entered into with, or offered to, a person who is not an eligible contract participant or eligible commercial entity. The second limb, which must also be met, is that the transaction is entered into, or offered, on a leveraged or margined basis, or financed by the offeror, the counterparty or a person acting in concert with either. Unless such a transaction is conducted on or subject to the rules of a designated contract market, the statute makes it unlawful to offer to enter into, execute or confirm it. The same prohibition reaches conducting any business to solicit orders for such transactions, or otherwise dealing in them, and the ANPRM calls this the on-exchange requirement. The statute itself carves out, among other things, a contract of sale that results in actual delivery within 28 days, or such longer period as the Commission may set by rule, which the ANPRM calls the actual delivery exception.
Two points in that language matter for product teams. The statute reaches offers, not only completed trades. And it turns on the customer’s status and the presence of leverage, margin or financing, not on whether the product is labeled spot or derivative.
The ANPRM defines a crypto asset as any digital representation of value recorded on a cryptographically secured distributed ledger. It adds that any crypto asset, other than a payment stablecoin issued by a permitted payment stablecoin issuer under the GENIUS Act, could meet the Act’s definition of commodity. The Commission uses the label “Crypto Asset Transactions”, or CTXs, for the retail commodity transactions described in section 2(c)(2)(D)(i) that involve crypto assets. In our reading, that scope is wide enough to catch most tokens an exchange lists, and the question for any given product is the leverage limb, not the commodity limb.
Why the Commission is acting, and what it signals
The ANPRM states that the Commission has not yet adopted rules answering how section 2(c)(2)(D) applies to crypto assets, blockchain technologies and CTXs. It also refers to the Commission’s 2020 interpretive guidance on the section as now withdrawn. The notice cites that withdrawal at 90 FR 58149, dated December 16, 2025. The Commission writes that the resulting uncertainty over compliance with the on-exchange requirement has stymied Congress’s intent to bring retail commodity transactions onto DCMs.
The notice recounts the Commission’s own enforcement of the section: it says the Commission applied section 2(c)(2)(D) to a crypto asset exchange for the first time in June 2016, when it charged a platform with violations of the on-exchange requirement. It quotes its then Director of Enforcement, who said in 2023 that the Division would continue to pursue its interpretation of unlawful activities under the Act in crypto assets through enforcement actions. In our reading, that history answers whether the section applies to crypto today: it has for a decade, and this notice is about writing rules under it, not switching it on.
The second theme is the state regimes. The Commission writes that US retail participants in the crypto asset markets have been forced to rely primarily on state-level regulatory protections. It names state money transmission licensing and crypto-specific regimes such as New York’s BitLicense and California’s Digital Financial Assets license. It notes that businesses offering crypto asset exchanges must typically also register with FinCEN as money services businesses and comply with federal regulations. In the Commission’s characterization, money transmission regulation pertains primarily to transaction-level rather than market-wide risks. According to the Commission, state licensure regimes do not feature rules designed to ensure orderly and transparent trading in the way the federal market structure framework does. It adds that state money transmission laws vary widely in how they restrict the investment of customer funds. And it observes that crypto asset exchanges operating under state licensure regimes have no legal mechanism, authority or obligation to self-regulate their markets comparable to that of a DCM.
Read together, these passages suggest the Commission sees the DCM, with its self-regulatory duties, surveillance obligations and customer funds rules, as the center of the future regime, rather than a new stand-alone license for crypto exchanges. If that reading holds, the operating model question for an exchange is likely to be whether to become a DCM, to route retail leveraged products through one, or to redesign products so they fall outside section 2(c)(2)(D) altogether. The on-exchange requirement is not something the ANPRM would create; it is something the ANPRM would finally explain.
The on-exchange requirement is not something the ANPRM would create; it is something the ANPRM would finally explain.
What still applies
Nothing in an advance notice changes an obligation today, in our reading. The on-exchange requirement dates from 2010 and the ANPRM describes it as current law. The state money transmission licenses, the BitLicense, the California license and FinCEN registration that the ANPRM describes appear unaffected by the notice itself; the Commission’s criticism of those regimes is an argument for rulemaking, not a safe harbor from them. Firms that rely on an exception to section 2(c)(2)(D) should note that the ANPRM identifies no rule defining those exceptions and that the 2020 guidance is gone. The exception itself is in the statute, and the notice does not touch it. Our crypto compliance guide for digital assets covers the layers of obligation that sit beneath this rulemaking and are likely to remain in place whatever the Commission proposes.
What firms should do
First, map every product offered to US customers against the two limbs of the statute. For each one, record whether the customer base could include persons who are not eligible contract participants, and whether the product involves leverage, margin, or financing by the firm or by anyone acting in concert with it.
Second, document any exception the firm relies on. If the answer to the first exercise is that a product is leveraged, margined or financed and is offered off a DCM, the firm is relying on an exception whether or not anyone has written it down. If that exception is the actual-delivery exception, set out the legal reasoning, the operational facts that support it, and the date of the last review. With the 2020 guidance withdrawn, that reasoning must stand on the statute and the case law, and this is a point on which firms should take legal advice.
Third, understand the DCM scenario. An advance notice is too early to cost anything, but it is not too early to know what listing retail leveraged products through an existing DCM, or seeking designation, would involve. Pay attention to clearing, market surveillance and the treatment of customer funds, because the ANPRM’s comparison with state regimes focuses on those areas.
Fourth, comment. The Commission seeks comment on all aspects of the notice and sets out specific questions in Sections IV and V. Comments are published without review for, or removal of, personal identifying information or business information. Decide early what the firm is willing to say on the record, and keep anything commercially sensitive out of the filing. The deadline is December 14, 2026.
Fifth, brief the board. The notice itself asks nothing of the firm. The board should understand that the firm’s retail leverage products sit inside a statute that has applied since 2010 and that the Commission has enforced, that the guidance firms used to read its main exception was withdrawn in December 2025, and that the Commission now intends to implement the section by rule. In our reading, the firm’s position on exceptions deserves attention for those reasons, not because of the notice.
If the firm needs a quick, specific answer on whether a product is likely to sit inside section 2(c)(2)(D), or on how to frame a comment, Taft’s Expert Line puts that question to someone who has held the compliance chair, in plain words and without a long engagement. Where a question turns on the legal reading of an exception, Taft will say so and point the firm to counsel.
Sources
- Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets (Commodity Futures Trading Commission, advance notice of proposed rulemaking, full text), Federal Register
Taft does not provide legal advice. Content is for informational purposes only and subject to regulatory guidance.