Remarks At The Fordham Law Blockchain Regulatory Symposium, CFTC Chairman Michael S. Selig, New York, NY | October 05, 2026

Chris, thank you for the kind introduction. It’s great to be back with you in New York City. It feels like just yesterday that we were sitting together talking shop in Willkie’s offices down the street. After having had the opportunity to work with you at the Commission and in private practice, it’s an incredible honor to now follow in your footsteps as Chairman of the Commodity Futures Trading Commission (CFTC). But there will always be only one “CryptoDad.”

You once said “we owe it to this new generation to respect their enthusiasm about [crypto] with a thoughtful and balanced response, not a dismissive one.”[1] I hope the regulatory initiatives that I’ll be sharing with you all today demonstrate that the CFTC is committed to doing so.

But before I begin, I must note that the views I share today are my own as Chairman and don’t necessarily reflect those of the Commission.

Satoshi’s Revolution

In the wake of the dot-com bubble, Professor Carlota Perez observed in her seminal work Technological Revolutions and Financial Capital that transformational technologies, like the printing press, railroad, and internet, all result in a similar structure of technological revolution. She explained that each revolution begins with the 

. . . replacement of one set of technologies by another . . . Investment in the new industries is carried out by new entrepreneurs while the young financial tycoons create a whirlpool that sucks in huge amounts of the world’s wealth to reallocate it in more adventurous or reckless hands . . . Eventually, it has to collapse. But when it does, the changeover has been made. . . . the new way of doing things with new technologies has become ‘common sense.’ . . . Though the debate about the causes and the culprits can go on forever, the more practical task of setting up an adequate regulatory system and a set of effective safeguards is soon undertaken. Thanks to the crash and the recession, there is a newfound readiness to accept such rules on the part of the – until recently arrogant – financial wizards, now sobered up. If, at this turning point, the institutional adjustment is successfully achieved, what follows may be a golden age.[2]

Nearly two decades ago, Satoshi Nakamoto published a white paper called “Bitcoin: A Peer-to-Peer Electronic Cash System”[3] that was the big-bang of a new universe of decentralized networks, applications, and assets. The white paper described a “system based on cryptographic proof instead of trust, allowing any two parties to transact directly with each other without the need for a trusted third party.”[4] Several months later, Nakamoto released the open-source Bitcoin Core software, creating the very first blockchain network and crypto asset.[5] Unlike other networks, Bitcoin is decentralized both politically and architecturally – no single person controls it and it has no central point of failure – but it’s logically centralized in that it requires a distributed set of nodes to reach consensus on the system’s state to function as a single virtual computer.[6]

Bitcoin didn’t immediately catch on.[7] But soon the software initially adopted solely by “cypherpunks” at the fringes of the technological frontier had inspired a new generation of builders across the world.

One of those innovators was Vitalik Buterin, who developed his own white paper describing a blockchain network called Ethereum.[8] Buterin iterated upon Nakamoto’s design for a trust-minimized[9] virtual computer shared across a network of peers[10] and created a Turing-complete system that supported programmable smart contracts. Unlike Nakamoto’s bitcoin, Buterin designed Ethereum as a general-purpose protocol that would “allow other decentralized applications to build on top of it.”[11] The network’s native crypto asset – ether – would serve an essential role as “gas,” required to run transactions on the protocol. Armed with this technology and a new programming language called Solidity, developers across the world set out to create new decentralized applications.

Blockchain technology “combine[d] the openness of democracy and the Internet with the merit of markets” and made it possible to “port the market model to places where it couldn’t go before.”[12] A blockchain’s core software, running on each network participant’s hardware, dictates the terms of network consensus and each participant is incentivized to follow these rules, minimizing trust in any individual participant.

This remedied what Marc Andreessen has referred to as the “original sin” of the internet – its lack of a native property ownership protocol.[13] As the economist Hernando de Soto has observed, the ability to own property with the assurance that it will not arbitrarily be taken away transforms property into capital and unleashes its potential energy into the broader economy.[14] In contrast to the offline world, the internet allowed users to read and write, but not to own value without reliance on a trusted party.[15] Without a native property ownership system, intermediaries stepped in to perform this function and users, startups, and creators were left reliant on centralized platforms that could change the rules on them at any time.[16] The open and merit-based market model of the blockchain brought permissionless innovation back to the internet, made it possible to own and transfer value without a bank account or subscription service, and turned network users into network stakeholders.[17]

This new ability to represent virtually anything and everything as a crypto asset on a blockchain led to a “Cambrian explosion”[18] of crypto assets on general-purpose blockchain networks like Ethereum, Cosmos, and Solana. We saw the invention of entirely new categories of programmable digital objects with varying degrees of external dependencies.[19] While the very first crypto assets were designed to function as currencies, many that followed were intended to be commodities that performed a specific role in a decentralized network or application and derived their value from network effects. We also saw the “tokenization” of a wide range of real-world assets, such as stocks, dollars, precious metals, and even jpegs.

Although Nakamoto’s vision was for a virtual economy without trusted intermediaries, centralized crypto asset exchanges and brokerages soon emerged to meet demand for on- and off-ramps to the frontier. Many of the earliest exchanges and brokerages formed offshore before imploding in the wake of devastating cyber-attacks and rampant fraud.[20] Others chose to attempt to navigate a complex regulatory landscape in the United States.

After the collapse of a popular offshore exchange, state banking regulators across the country deemed crypto assets to be a form of “money” or “currency” under their respective state money transmission statutes and required exchanges and brokerages to be licensed as money transmitters. State money transmission laws originated in the early 1900s to protect customers of non-bank service providers from fraud and insolvency in connection with remittances and payments.[21] Exchanges and brokerages soon found themselves licensed in up to fifty states and territories, alongside gift card issuers and check cashers. These state regimes required licensees to perform important functions, such as know-your-customer and anti-money laundering checks, but did not require licensees to institute market-based protections that are typical under federal market regulatory regimes, such as orderly trading requirements, anti-manipulation rules, and mitigation of conflicts of interest. Nor did these regimes contemplate separate licenses and requirements for brokering, dealing, executing, and clearing trades.

As crypto exploded in popularity, issuers of new crypto assets began to sell their coins directly to the public in what came to be known as “initial coin offerings.”[22] Without clear rules of the road, consumers had difficulty discerning the legitimate projects from the fraudulent ones, and trouble distinguishing the Pets.com’s from the Amazon’s. Like the dot-com bubble before it, the “ICO” bubble eventually burst, and a “crypto winter” set in. But the builders continued to innovate, designing new network layers, protocols, and products. Winter gave way to “crypto spring” and “defi summer,” and each cycle a new class of builders entered the fray.

1) What

When the news broke about FTX, it was a slow drip over hours, days, and weeks. A CoinDesk article questioned the company’s balance sheet.[23] Another exchange’s chief executive publicly expressed skepticism about the company’s financials. FTX’s founder, Sam Bankman-Fried, followed with the infamous “1) What” tweet.[24] FTX’s lenders then struggled to figure out what to do with the “FTT” tokens they held as collateral.[25] Founders and investors frantically called their lawyers and advisors for help. Distressed funds circled the wreckage, picking through FTT and other stranded tokens at collapsed prices as firms raced to salvage whatever value remained. Meanwhile, lawyers and advisors anxiously refreshed their browsers for the latest installment of Matt Levine’s daily coverage of the debacle.[26]

Eventually it came to light that FTX’s operators stole more than $8 billion in exchange customer assets to engage in their own proprietary investments. Although FTX had a U.S. subsidiary with state money transmitter licenses, its customers’ funds were nowhere to be found. However, the customer property held by FTX’s CFTC-registered subsidiaries remained segregated and secure. A credit to the agency’s robust customer safeguards and market surveillance.

As Professor Perez observed, eventually the euphoria ends, but when it does “the new way of doing things with new technologies has become ‘common sense.’”[27] FTX’s implosion reverberated throughout the global crypto markets and ushered in a crypto winter unlike any the industry had seen before, but the technology persevered.

This is when the American crypto industry learned “[t]he nine most terrifying words in the English language . . . I’m from the Government, and I’m here to help.”[28]

Regulation in One Lesson

Governments across the globe scrambled to respond to FTX’s collapse as crypto asset intermediaries across the world continued to fall. In the ensuing months and years, legislators and regulators convened hearings, roundtables, and studies to support the development of new laws and regulations for crypto markets. Dozens of countries then established comprehensive regulatory regimes. The European Union codified MiCA,[29] the United Kingdom issued crypto market rules under FSMA,[30] and Singapore instituted regulations for digital token service providers.[31]

In the United States, the CFTC and Securities and Exchange Commission (SEC) took a different approach. The agencies chose to utilize their existing statutory authorities not to write new rules for these markets, but to regulate them by enforcement.

Before enforcement came to define the federal government’s approach to crypto, both agencies spent half a decade attempting to chart a regulatory path for crypto assets.

In 2014, former CFTC Chairman Timothy Massad declared bitcoin to be a “commodity” within the Commission’s regulatory scheme.[32] The CFTC later greenlit the first regulated bitcoin futures contracts under the leadership of former Chairman Chris Giancarlo.[33] In the years that followed, former Chairman Heath Tarbert set forth his views as Chairman when he deemed ether to be a “commodity” and, under his leadership, the agency finalized interpretive guidance concerning the term “actual delivery” in relation to crypto assets.[34]

Around this time, the SEC staff followed with a “framework”[35] on investment contracts involving crypto assets and several no-action letters to crypto asset issuers clarifying that their coin offerings would not be subject to registration with the agency.[36] With more than 50 subjective factors to navigate, and no further guidance from the SEC, market participants resorted to creating a dedicated “Crypto Rating Council” to score, on a 1-5 scale, the likelihood of a crypto asset being deemed to be a security.[37] Lawyers started churning out reasoned Howey memos in attempts to untie a Gordian knot of almost a century of case law concerning orange groves, payphones, chinchillas, and condominiums in transactions that bore almost no resemblance to the emergent, decentralized business models that were on the cusp of the new frontier of finance. A boon for lawyers’ billable hours – not so much for American innovators.

Then, under the Biden administration, the agencies quickly shifted course to regulation by enforcement – a trend that amplified dramatically in the wake of FTX’s downfall. Crypto no-action letters quickly became historical artifacts of a bygone era after regulators closed their doors to productive discussions with market participants.

The CFTC used its authority over “retail commodity transactions” under section 2(c)(2)(D) of the Commodity Exchange Act (CEA) to charge several operators of centralized exchanges and developers of decentralized exchange protocols for offering transactions that are required to be executed on a CFTC-registered exchange, known as a designated contract market (or DCM).[38] The agency proceeded with these investigations and lawsuits despite the lack of clear rules, interpretations, or relief needed to make on-exchange trading of crypto assets possible.

In one case, the CFTC obtained a default judgment against a decentralized autonomous organization after serving process on the protocol by messaging an online “help chat box” on its website.[39] In another, the agency fined a software developer for offering a user interface for an automated market maker protocol that enabled users to interact with smart contracts to engage in off-exchange retail commodity transactions.[40]

The status of a given crypto asset as a “commodity” within the CFTC’s remit could only be determined based upon a review of the non-exhaustive list of assets included in each lawsuit and cross-reference against the copious list of “crypto asset securities” included in the SEC’s lawsuits.[41] Yet it wasn’t even clear that the heads of the two agencies agreed on which assets were and weren’t securities.

Under former SEC Chairman Gary Gensler’s leadership, the agency similarly charged operators of centralized exchanges and developers of decentralized protocols with failure to register as broker-dealers and national securities exchanges. He glibly directed new entrants to fill out “a form on our website” to register without making any modifications to the SEC’s rules or regulations to accommodate the technology.[42]

This may have been a golden age for the Cayman Islands legal bar, which gladly incorporated hundreds of offshore foundation companies for crypto projects, but it was the dark ages for the United States. After the onslaught, few crypto firms remained in the country, each clinging to every word of Commissioner Hester Peirce’s dissenting statements to keep the faith.[43]

Hard Fork

After President Trump took office last year, the President’s Working Group on Digital Asset Markets quickly instituted a hard fork from these Biden era policies.

SEC Chairman Atkins and I partnered together on Project Crypto to modernize our agencies’ rules and regulations to allow our markets to move onchain. As part of this initiative, the CFTC and SEC codified a joint interpretation to put Gary Gensler’s “embodiment theory” of security status to bed once and for all.[44] Our joint interpretation classified crypto assets into five general categories: digital commodities,[45] digital collectibles,[46] digital tools,[47] stablecoins,[48] and digital securities.[49] The interpretation clarified that the first three categories are generally not securities, stablecoins may in some cases be structured as securities, and digital securities are, of course, securities. The interpretation also explains how a non-security crypto asset offered or sold as part of an investment contract security may separate from the investment contract and no longer be subject to the federal securities laws.[50]

The SEC subsequently proposed Regulation Crypto Assets to establish a purpose-fit regulatory framework for offerings of investment contracts involving crypto assets and a security status “safe harbor” for crypto assets sold in these offerings.[51] The administration delivered the clarity, certainty, and investor protections that crypto projects and participants demanded for American crypto asset distributions.

A New Path Forward: Regulation CTX and Regulation CAM

Now, I’m disappointed that Congress failed to deliver the Clarity Act to the President’s desk. This legislation would have codified in statute the line that Chairman Atkins and I have drawn between securities and non-securities, mandated that centralized crypto asset exchanges and brokerages register with the CFTC, and instituted purpose-fit core principles for these new CFTC registrants. But President Trump promised to deliver a crypto asset regulatory market structure with or without legislation, and we will help him deliver it using our existing statutory authorities.

Today, the CFTC is doing its part to deliver clear rules of the road for crypto asset markets with its advanced notice of proposed rulemaking on Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM), which is now live on the CFTC’s website. These rules would codify a pathway for crypto asset exchanges to operate under uniform national oversight by the CFTC pursuant to the same statutory authorities that the prior administration instead utilized to regulate by enforcement.

I want to underscore that this is a federal option for crypto asset exchanges. Just like the banking regulatory system, where firms may choose to pursue either a federal or state charter, with each type of charter authorizing the firm to engage in differing types of permissible activities, crypto firms should be free to pursue state licenses or federal registrations based upon the products and services the firm intends to offer. Only Congress has the authority to mandate that all crypto asset exchanges register with the Commission. However, Congress has mandated that exchanges that wish to offer retail customers the ability to trade crypto assets on a margined, leveraged, or financed basis register with the agency. But the agency never used this authority to issue purpose-fit rules for these transactions or platforms, only to enforce.

You might envision a ladder. On the first rung of the ladder are ordinary spot crypto exchanges (Rung 1 Exchanges), which are subject to the CFTC’s anti-fraud and anti-manipulation authority but are otherwise generally regulated under state money transmission laws. On the second rung are exchanges that also offer retail customers the ability to trade crypto assets on a margined, leveraged, or financed basis (Rung 2 Exchanges), which are required to register with the CFTC and subject to its exclusive regulation. On the third rung are exchanges that also allow customers to trade perps and all other types of derivatives (Rung 3 Exchanges), which are also required to register with the CFTC and subject to its exclusive jurisdiction.

Today’s initial proposals would establish a regulatory framework for Rung 2 Exchanges—or firms offering retail customers the ability to trade crypto assets on a margined, leveraged, or financed basis. We refer to such a transaction as a CTX. Rung 3 Exchanges that are already registered with the CFTC as a DCM could begin offering trading in CTXs on their platforms under tailored rules. Non-registrants that wish to only offer CTXs could choose to either register as an ordinary DCM or pursue registration as a new sub-category of DCM called a “crypto asset market” (or CAM).

This provides firms with a clearer framework for evaluating how to best serve their customers in the United States and helps customers understand what protections apply to the platform they choose.

The CAM regime is designed for exchanges that only offer CTXs. To obtain designation as a CAM, an exchange would be required to adhere to the statutory DCM core principles, but with the benefit of a tailored set of regulations that are purpose-built and designed for CTXs. An exchange offering futures, options, or swaps would remain subject to the current DCM framework.

The statutory DCM core principles give us a sound starting point for the effective regulation of CAMs engaged in creating and administering national markets in CTXs. Principles 3 and 4 address contract listings and market surveillance.[52] Principles 11 and 12 address financial integrity, customer funds, and abusive practices.[53] Principles 16 and 20 address conflicts and system safeguards.[54] For CAMs, the rules promulgated under these statutory obligations would address the specific risks posed by, and commercial realities of, CTXs.

For example, the statutory requirements of DCM Core Principle 3 require a CAM to show that a CTX is not readily susceptible to manipulation.[55] However, the considerations in ensuring compliance with that statutory obligation with respect to CTXs differ from the considerations that are relevant to more traditional CFTC-regulated products. When listing CTXs, DCMs and CAMs may have to consider the distribution method and concentration of crypto assets, lock-ups periods and vesting schedules, whether there are programmatic issuances or buybacks, and a flurry of other crypto asset-specific considerations related to manipulation risks. Many crypto asset exchanges already voluntarily employ purpose-fit procedures to prevent the listing of crypto assets that are readily susceptible to manipulation. The proposed Regulation CAM regime would codify best practices into regulatory obligations that will serve the interests of American markets and their retail participants. Similarly, the Regulation CAM proposal also contemplates a “proof-of-reserves” obligation for exchanges that maintain customer property in omnibus accounts held for their customers’ benefit – a safeguard that I am sure would have benefitted FTX’s retail customers. 

The proposed rules further contemplate the required intermediation of CTXs by a futures commission merchant (or FCM). Those FCMs would manage customer accounts and funds, subject to the CEA’s customer protection requirements, including disclosures,[56] capital requirements,[57] and customer property segregation,[58] among other areas. We are also examining and would welcome views on how FCM requirements should fit crypto asset activity while preserving clear responsibility for customer property, records, segregation, risk controls, and supervision. Requiring FCM intermediation of CTXs also ensures that customer-facing activity on a CAM would be subject to the Bank Secrecy Act’s (BSA) applicable anti-money laundering, customer identification, and suspicious activity reporting requirements, along with the various other related legal and regulatory obligations that the BSA and Commission regulations impose on FCMs.[59]

For those who prefer to do things the way the cypherpunks originally envisioned, we aim to provide the clarity needed for onchain finance to flourish. Our statute provides an exception to the on-exchange trading requirement for CTXs that involve “actual delivery” of the commodity within 28 days. We propose to codify an interpretation of “actual delivery” to clarify that delivery of a crypto asset to a user’s external, non-custodial digital wallet within 28 days generally satisfies this exception.

Onchain Finance

And, another aside on onchain finance. Although outside the scope of today’s proposals, we are also exploring a durable policy for developers who publish software but do not solicit or take orders, control execution, or hold customer assets. A person should not have to register as an introducing broker simply because that person shipped code.

We are also working directly with builders to develop lawful pathways for onchain products in the United States. I’ve directed CFTC staff to engage with developers and founders to understand how onchain venues function, where control resides, how their activities compare to those performed by traditional market intermediaries, and how the CEA and our regulations apply to these new models.

American builders should have a clear path to bring new products to market here, under rules that protect customers and preserve market integrity, without sacrificing the features that make these technologies innovative in the first place.

And that brings me back to the broader purpose of the proposed framework I have outlined today.

Golden Age

As Professor Perez observed, technological revolutions have occurred and followed a similar course throughout human history. From the joint stock company to the railroad to the internet, new technologies are invariably dismissed, then abused by bad actors; there is a frenzy, a bubble, and an inevitable bust; at which point the technology has become common sense and regulators must craft rules for the new frontier. If the regulators get the rules right, they can usher in a golden age.

The framework I have outlined is an important step towards bringing crypto asset markets within the protections of the CEA. It will establish clear rules of the road for firms that want to serve American customers, strengthen the integrity of these markets, and provide a path for responsible innovation to take place here in America.

For years, entrepreneurs building on the new frontier of finance faced uncertainty about whether there was a place for them in our markets. We are giving them an answer.

Build here. Build markets that are open, competitive, and worthy of the public’s trust. Build under American rules and American standards. And build knowing that responsible innovation has a place in the United States.

Satoshi’s technological revolution has transformed global financial markets. If America can embrace this paradigm shift and get the right regulations in place, we can usher in a golden age like those that followed the transformative technologies of the past.[60]

Thank you, and I look forward to the fireside chat to follow.

 

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