Daily News 19

Tag: Michael Selig

  • Clarity Act Stalled; CFTC Submits Cryptocurrency Draft to White House

    Clarity Act Stalled; CFTC Submits Cryptocurrency Draft to White House

    Key Highlights

    • The Clarity Act, a leading legislative effort to establish a comprehensive U.S. cryptocurrency market framework, failed a procedural Senate vote this week.
    • The CFTC submitted a new regulatory proposal to the White House Office of Management and Budget on September 17, now under interagency review by OIRA.
    • CFTC Chair Michael Selig directed staff to “develop ways to formalize the digital asset market structure using the agency’s existing legal authority, independently of congressional legislation,” signaling a potential administrative path forward.

    Senate Setback for Clarity Act Prompts CFTC Administrative Action

    The legislative path toward a unified federal framework for digital assets encountered a significant obstacle this week when the Clarity Act failed to secure the necessary votes to advance in the U.S. Senate. The bill, widely regarded as one of the most consequential attempts to codify comprehensive rules for cryptocurrency markets, stalled on a procedural vote, leaving a regulatory vacuum that the Commodity Futures Trading Commission (CFTC) appears prepared to address through administrative rulemaking.

    CFTC Proposal Enters White House Interagency Review

    According to the Office of Information and Regulatory Affairs (OIRA) within the White House Office of Management and Budget, the CFTC formally submitted a new proposal on September 17. The submission is currently undergoing interagency review, a standard step before a proposed rule can be published for public comment in the Federal Register. While the full scope and specific provisions of the regulation have not been disclosed, a Bloomberg report analyzing the draft title indicates the commission intends to establish a comprehensive regulatory framework governing cryptocurrency transactions and the operational structure of digital asset markets.

    Chair Selig Signals Intent to Leverage Existing Authority

    The agency’s move aligns with recent public statements from CFTC Chairman Michael Selig, who said he had instructed staff to “develop ways to formalize the digital asset market structure using the agency’s existing legal authority, independently of congressional legislation.” This approach suggests the commission is prepared to assert jurisdiction over digital asset markets—particularly those involving commodities and derivatives—without waiting for new statutory mandates from Congress.

    Industry Observers Note Accelerated Timeline

    The speed of the CFTC’s submission drew immediate attention from policy analysts. Hyperliquid Policy Center CEO Jake Chervinsky posted on X, “The CFTC is moving fast. It appears to have sent a proposed rule for interagency review.” His observation underscores a growing perception that federal regulators may pursue parallel administrative tracks to address digital asset oversight while legislative efforts remain gridlocked.

    Why This Matters

    The dual developments—legislative stall and regulatory acceleration—highlight a pivotal moment for U.S. crypto policy. With the Clarity Act’s future uncertain, the CFTC’s proposal represents the most concrete federal initiative to date to define market structure rules for digital assets under existing commodities law. If finalized, the rule could establish registration, reporting, and operational standards for trading platforms, custodians, and market participants, shaping compliance obligations across the industry. However, the scope of the CFTC’s authority over spot digital asset markets remains legally contested, and any rulemaking will likely face scrutiny from both industry stakeholders and congressional committees. The OIRA review period typically spans 90 days but can be extended, meaning the earliest public glimpse of the proposed text may arrive in late 2024 or early 2025.

    Frequently Asked Questions

    What is the Clarity Act and why did it fail?
    The Clarity Act is a Senate bill designed to create a comprehensive legal framework for cryptocurrency markets in the United States. It failed a procedural vote this week, meaning it did not receive the necessary support to advance to debate or a final vote on the Senate floor.
    What does the CFTC’s new proposal aim to do?
    Based on the draft title reviewed by Bloomberg, the CFTC’s proposal seeks to create a comprehensive regulatory framework for cryptocurrency transactions and the functioning of digital asset markets, using the agency’s existing authority under the Commodity Exchange Act.
    When will the public see the details of the CFTC proposal?
    The proposal is currently under review by the Office of Information and Regulatory Affairs (OIRA). Interagency review typically takes up to 90 days, after which the CFTC would publish a Notice of Proposed Rulemaking in the Federal Register for public comment.
  • CFTC Submits Crypto Market Structure Proposal to White House for Review

    CFTC Submits Crypto Market Structure Proposal to White House for Review

    Key Highlights

    • The CFTC has submitted a proposed regulatory framework for crypto asset transactions and markets to the White House Office of Management and Budget for review.
    • The move comes after the CLARITY Act stalled in the Senate, prompting the agency to act under its existing authorities.
    • The proposal could establish a new “crypto asset market” category for eligible exchanges and permit leveraged or margined crypto trading.

    CFTC Advances Crypto Rulemaking Amid Legislative Gridlock

    The Commodity Futures Trading Commission is forging ahead with its own regulatory framework for digital asset markets after congressional action on the CLARITY Act stalled in the Senate. Federal records confirm the agency formally submitted its proposed rule set to the White House Office of Management and Budget on September 17, initiating the interagency review process required before the commission can vote on publication for public comment.

    Proposal Leverages Existing Statutory Authority

    Chairman Michael Selig signaled the agency’s intent in August, stating that CFTC staff were developing rules under existing authorities that would create a new category of “crypto asset market” for eligible exchanges and permit crypto trading on a leveraged or margined basis. The submission to OMB represents a concrete step toward formalizing that vision, bypassing the legislative impasse that has left a regulatory vacuum for spot and derivatives crypto markets alike.

    Regulatory Process and Next Steps

    The proposal now faces OMB review, which may result in revisions before the document returns to the CFTC for a commission vote. If approved, the agency would publish a notice of proposed rulemaking in the Federal Register, opening a public comment period. A final rule would then require another commission vote before taking effect, a timeline that could extend well into 2025 depending on the volume of feedback and any legal challenges.

    Why This Matters

    The CFTC’s unilateral action underscores the growing urgency among U.S. regulators to establish guardrails for the digital asset ecosystem in the absence of comprehensive legislation. While the Securities and Exchange Commission has pursued enforcement actions, the CFTC’s rulemaking approach aims to create a structured registration and compliance regime for platforms offering crypto derivatives and leveraged products. Market participants, including exchanges, custodians, and institutional investors, are closely monitoring the process for clarity on eligibility standards, capital requirements, and customer protection provisions. The outcome will shape the competitive landscape for U.S.-based crypto trading venues and influence global regulatory alignment.

    Frequently Asked Questions

    What is the CLARITY Act and why did it stall?

    The CLARITY Act (Commodity Legislation for America’s Regulatory Improvement and Transparency Yearly) was a bipartisan bill designed to clarify the CFTC’s jurisdiction over digital commodity markets. It passed the House Agriculture Committee but did not advance to a full Senate vote before the legislative calendar compressed ahead of the election cycle.

    What does a “crypto asset market” designation mean for exchanges?

    Based on Chairman Selig’s public remarks, the new category would allow eligible platforms to register with the CFTC and offer leveraged or margined trading of digital assets under a defined regulatory framework, including capital, reporting, and customer segregation requirements.

    How long before a final rule takes effect?

    After OMB review and a CFTC vote to propose, a public comment period of at least 30 to 60 days is typical. The commission must then review comments, potentially revise the rule, and vote again on a final version. The entire process often takes six to twelve months or longer.

  • SEC, CFTC Expand Oversight After Clarity Act Stalls

    SEC, CFTC Expand Oversight After Clarity Act Stalls

    The Senate failed to advance the CLARITY Act in a closely watched vote yesterday, prompting an immediate shift in industry focus toward regulatory action by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). With comprehensive market-structure legislation stalled, attention is turning to what the agencies can achieve under existing authority.

    Industry Reaction: Setback, Not Surprise

    Speaking at the Avalanche Summit, Charley Cooper, President of Ava Labs and former CFTC Chief of Staff and Chief Operating Officer, characterized the failed vote as expected. “I can only speculate because I wasn’t in the room,” he said about the failed vote, “but I think there were multiple issues that came into play.” Cooper cited concerns over yield-bearing stablecoins and the difficulty of moving partisan legislation in a midterm election year. “Wasn’t a surprise,” he added.

    Cooper anticipates that agency rulemaking will gain urgency but cautioned on the timeline. “You’re probably looking at… six-plus months before you really begin to see these rules being done in earnest.” Despite the delay, he rejected the notion that the industry should pause. “The failure of the CLARITY Act to pass does not mean there’s a set of things we’re not allowed to do in crypto,” he said. “As an industry, we cannot sit on our hands waiting for permission to do things. That’s how industries die, and I can tell you crypto is well out of the box.” Cooper emphasized that Avalanche is not changing course and will meet clients “where their risk tolerance takes them.”

    Regulators Signal Intent to Act

    Both the SEC and CFTC signaled Wednesday that they intend to move forward independently. SEC Chairman Paul Atkins stated that “with or without legislation, we will act decisively within the SEC’s statutory authority to deliver certainty for American investors and for the entrepreneurs shaping our technological future.” The SEC had previously proposed Regulation Crypto Assets in August, establishing a framework for certain investment contracts involving crypto assets.

    CFTC Chairman Michael Selig was similarly explicit following the Senate vote. He said the agency would work “using our existing statutory authorities,” adding that the CFTC is “locked in and ready to ship its rules for the new frontier of finance.” The two agencies have already been coordinating through Project Crypto, including a joint interpretation issued in March clarifying how federal securities laws apply to certain crypto assets.

    Legislation vs. Rulemaking: Permanence Concerns

    Agency action, however, lacks the permanence of legislation. Atkins acknowledged this limitation in August, calling legislation “indispensable” to creating rules that cannot easily be reversed by a future regulator.

    That message was reinforced during the summit’s CLARITY Act panel. Representatives from the Digital Chamber, Blockchain Association, Crypto Council for Innovation, and DeFi Education Fund described the vote as a setback rather than a terminal failure. Panelists noted that many policy issues had been resolved with congressional staff before political disputes erupted in the final hours. They pointed to ethics conflicts as a remaining obstacle and said developer protections under the Blockchain Regulatory Certainty Act had also become politically contentious.

    Near-Term Outlook: Agency Action Leads

    The industry expects the SEC and CFTC to move quickly with existing rulemaking efforts. With Congress scheduled to recess in early October, agency action is seen as the more likely near-term path. While the absence of legislation may slow real-world-asset tokenization and other institutional projects, panelists and executives agreed the work will continue regardless.

  • CFTC Probes Polymarket Trades Linked to Biden Pardons, Iran, Google, Report Says

    CFTC Probes Polymarket Trades Linked to Biden Pardons, Iran, Google, Report Says

    CFTC Opens Three Insider Trading Investigations Into Polymarket

    The Commodity Futures Trading Commission has launched at least three previously unreported investigations into suspected insider trading on the prediction market platform Polymarket, according to a report from WIRED. The probes target event contracts tied to presidential pardons issued by former President Joe Biden, Iran-related geopolitical outcomes, and Google’s 2025 Year in Search rankings.

    First Probe Follows NPR Report on Pardon Markets

    CFTC Chairman Michael Selig approved the first investigation in early May. The action followed an NPR report detailing a trader who earned more than $300,000 from pardon-related markets after correctly predicting several preemptive pardons.

    Second Investigation Targets Iran Contracts

    A second investigation was approved at the end of May. This probe centers on Iran-related contracts and was prompted by a 60 Minutes report on accounts that reportedly earned $2.4 million with a 98% win rate.

    Third Probe Examines Google Search Rankings

    In July, the CFTC approved a third investigation into suspected insider trading involving Google’s 2025 Year in Search ranking. An agency official said the probe would examine additional individuals and noted that the Southern District of New York was conducting a parallel investigation.

    CFTC enforcement officials clarified that this investigation is separate from an existing case against former Google engineer Michele Spagnuolo, who allegedly made more than $1.2 million trading Polymarket contracts based on confidential information about Google’s 2025 Year in Search rankings.

    Polymarket’s U.S. Return Under CFTC Oversight

    Polymarket has been working to rebuild its reputation in the United States after four years of operating outside the country. In late 2025, the company relaunched in the U.S. following the acquisition of QCEX, granting Americans limited access to its event contracts under CFTC oversight.

    Previous DOJ and CFTC Probe Concluded

    The Justice Department, alongside the CFTC, previously examined whether the crypto prediction market circumvented restrictions on U.S. traders imposed under a 2022 settlement with the CFTC. The authorities ended that probe in July 2024.