U.S. regulators shift approach to cryptocurrency oversight

U.S. financial regulators are shifting their approach toward the oversight of digital assets. The Commodity Futures Trading Commission (CFTC) has opened a 60-day public comment period regarding a proposed federal licensing framework for cryptocurrency exchanges. Under this proposal, the provision of leverage would serve as a trigger for federal oversight. The framework includes two interconnected regulations: Regulation CTX (Crypto Asset Trading) and Regulation CAM (Crypto Asset Market). Under Regulation CTX, the CFTC suggests that even fully paid transactions could fall under its jurisdiction if leverage is provided and assets remain on the exchange’s internal system rather than in a customer's private wallet.

Simultaneously, the U.S. Department of the Treasury, through the Financial Crimes Enforcement Network (FinCEN), has withdrawn two long-standing proposals concerning self-custody cryptocurrency wallets and crypto mixing services. One proposal, dating back to 2020, would have required financial institutions to maintain records and report transactions involving certain self-custody wallets. Another 2023 proposal aimed to classify transactions involving crypto mixing services as high-risk for money laundering. Industry groups, such as the Digital Chamber, have welcomed the withdrawal of these rules, which marks a shift toward a regulatory environment intended to be ‘fit for purpose’ under the current administration.