CFTC Proposes Leveraged Crypto Trading Rules as FinCEN Scraps the $10,000 Self-Custody Wallet Rule: Regulators Move Alone After CLARITY's Collapse

The CFTC proposed two rules on Monday, October 5, 2026: Regulation CTX, covering leveraged, margined or financed retail crypto transactions, and Regulation CAM, a new crypto asset market category for exchanges that list only crypto.

The framework is voluntary. It offers exchanges a single federal pathway with proof of reserves, segregated customer funds, token listing safeguards and anti-manipulation rules, but it cannot force spot trading onto CFTC platforms or override state rules without Congress.

The same day, FinCEN filed notices withdrawing its December 2020 unhosted wallet proposal, which would have required reporting of transfers above $10,000 involving self-custodied wallets, and its 2023 proposal to treat crypto mixing as a primary money laundering concern.

Both moves come three weeks after the CLARITY Act failed a 49 to 50 cloture vote in the Senate, leaving agencies to shape crypto policy within existing law. CFTC Chairman Michael Selig called the proposals "just the beginning."

Nothing changes for traders today. The CFTC rules face a 60-day comment period after Federal Register publication, while the FinCEN proposals are off the table, though Coin Center warns the legal authority to write similar rules remains.

 

 

The CFTC's package has two parts. Regulation CTX, short for crypto asset transactions, sets requirements for retail crypto trades that are leveraged, margined or financed. Under Section 2(c)(2)(D) of the Commodity Exchange Act, those retail commodity transactions are treated like futures and must run through a CFTC-registered exchange, which is why the agency can write rules for them without new legislation. Regulation CAM, short for crypto asset markets, creates a dedicated crypto category within the designated contract market registration system, giving platforms that offer only crypto a tailored route to federal registration.

Selig framed the package as a break with the past. In an op-ed published alongside the proposal, he argued that enforcement-first regulation pushed legitimate firms offshore without stopping frauds like FTX, and declared, "Those days are over." He noted that while most of FTX's offshore and state-regulated entities went bankrupt, "the customer property held by its CFTC-registered subsidiary remained segregated and secure."

 

The proposal reads like a checklist of lessons from crypto's worst failures:

The rules would cover a broad range of crypto assets, including Bitcoin and Ethereum, which the CFTC and SEC jointly clarified earlier this year are not securities. The proposal went to the White House Office of Information and Regulatory Affairs for review on September 17, and the public will have 60 days to comment through Regulations.gov once it appears in the Federal Register.

 

The limits matter as much as the rules. Exchanges can opt into federal registration, but the CFTC cannot require crypto to trade on its platforms, and the proposal does not preempt state licensing. "We don't have the authority to impose such a requirement without congressional action," Selig acknowledged. That leaves the spot-market gap CoinDesk highlighted: ordinary unleveraged spot trading stays under a patchwork of state money transmitter licenses unless lawmakers act. Selig conceded that "we haven't solved every problem," while insisting that "today's action is just the beginning."

 

The same day, the Treasury Department's Financial Crimes Enforcement Network filed notices withdrawing two proposals that had hung over self-custody for years. The first, proposed in December 2020 during the final weeks of President Trump's first term, would have required banks and money services businesses to keep records of transactions above $3,000 involving unhosted, or self-custodied, wallets and to report those above $10,000, including counterparty information. "FinCEN will take no further action on this NPRM," the notice states.

The second, proposed in 2023, would have used Section 311 of the USA PATRIOT Act to designate international crypto mixing as a class of transactions of primary money laundering concern, requiring institutions to report wallet addresses, transaction hashes and IP addresses tied to suspected mixing. FinCEN now says the rule's "expansive definition of mixing could chill legitimate activity." It tied both withdrawals to the administration's deregulatory agenda and its push for "fit-for-purpose" digital asset rules, echoing a July 2025 White House report that said the administration "supports the ability of lawful users of digital assets to privately transact on a public blockchain."

 

 

Privacy advocates welcomed the move with caution. "It's been a hard month for privacy and your right to use crypto. There's a bright spot," said Peter Van Valkenburgh, executive director of Coin Center, who warned that "the underlying statutory authority to create new, similar bad rules remains."

 

The timing is no coincidence. The Senate's 49 to 50 cloture vote on September 15 stalled the CLARITY Act, the market structure bill that would have given spot crypto markets a federal regulator. Since then, Washington has shifted to what agencies can do alone: the SEC has advanced its own rulemaking and innovation exemption, the CFTC has now followed, and Treasury is clearing out legacy proposals. The trade-off is durability, because agency rules can be rewritten by the next administration far more easily than a statute. That is why the industry is still pressing Congress, with the Fairshake super PAC backing 32 House incumbents who supported the CLARITY Act, starting with $6 million for six of them ahead of the midterms.

 

Nothing changes in the market today, but the direction matters for global liquidity. A federal pathway for leveraged crypto trading, with proof of reserves and listing standards written into rules, could draw more regulated US capital into crypto over time, and the end of the unhosted wallet proposal removes a long-standing threat to moving funds between exchanges and personal wallets. The dates to watch are Federal Register publication, which starts the comment clock, and the first exchange applications under the new categories. Meanwhile, the habits the CFTC wants to mandate are worth practicing anywhere: check a platform's proof of reserves, understand leverage before using it, and keep long-term holdings in self-custody. Traders can follow BTC/USDT and ETH/USDT on MEXC and manage leveraged positions with stop-loss orders on MEXC Futures

 

Disclaimer: This content is for educational and reference purposes only and does not constitute any investment advice. Digital asset investments carry high risk. Please evaluate carefully and assume full responsibility for your own decisions.