US Retail Traders Could Use Crypto Margin Under Proposed Rules, CFTC Chair Says
CFTC Chairman Michael Selig says could allow U.S. retail investors to trade cryptocurrencies with margin and leverage.Will Crypto Traders Soon Access 7x Leverage?Speaking on the Bankless podcast on Oct. 19, Selig outlined two proposed regulatory frameworks:The Regulation Crypto Asset Transactions (CTX) would allow retail investors to trade cryptocurrencies such as Bitcoin and Ethereum using margin, leverage or financing on CFTC-regulated platforms.Traders could potentially pledge existing crypto holdings as collateral to finance additional positions.Selig said leverage limits would be determined by exchanges in consultation with the CFTC, with existing crypto derivatives markets generally allowing leverage of up to almost 7x.He clarified that 7x is not a fixed regulatory ceiling.The Regulation Crypto Asset Markets (CAM) would create a federal registration framework, reducing reliance on state licensing.Coinbase, Kraken and Gemini could potentially expand into leveraged spot trading, while new entrants would face fewer requirements than traditional derivatives exchanges.The rules would mandate customer fund segregation, separation of exchange functions and conflict-of-interest safeguards.Traders could also use crypto assets and potentially tokenized securities as collateral across financial products.Will CFTC Move Forward Without The Clarity Act?Selig said the CFTC has sufficient authority to advance crypto regulations despite the Clarity Act’s failure to pass Congress."We do have a ton of authority as an agency and we’re going to use it," he said.Unlike the Clarity Act’s mandatory registration framework, the CFTC proposal offers exchanges an optional federal pathway.The agency is coordinating with the SEC on crypto asset classification, with rules potentially advancing toward finalization in the coming months.Selig emphasized that bipartisan support would be essential to making the framework durable across administrations.Preview Image: Shutterstock