CFTC Commissioner Selig: Proposed Crypto Rules Designed to Prevent Another FTX Collapse

CFTC Commissioner Mike Selig asserted Wednesday that forthcoming regulations will prevent a repeat of the FTX collapse. Appearing on Fox Business Network’s “Varney & Co.,” Selig outlined plans for a federal registration framework allowing crypto exchanges to safeguard digital asset spot markets.

Once a dominant industry player, FTX filed for bankruptcy in 2022 following revelations of severe mismanagement. Founder Sam Bankman-Fried is currently serving a 25-year prison sentence for fraud after $8 billion in customer funds were misappropriated.

The CFTC and other regulators are advancing rulemaking for the digital asset sector despite lawmakers blocking the long-awaited Clarity Act last month. “Four years ago, we saw the collapse of Sam Bankman-Fried’s FTX, where he stole over $8 billion in customer funds. That can’t happen under our regime,” Selig said.

“Actually, Sam Bankman-Fried’s subsidiary that was CFTC registered—all the funds were safe and secure because they were segregated, and we have some of the most stringent requirements of any federal agency when it comes to markets. We want to bring that to the crypto world,” he added.

Selig noted that exchanges may opt to remain under state regulatory regimes, while others may pursue federal registration. Exercising existing authority, the CFTC this week requested public comment on a framework establishing a new “crypto asset market” registration category for platforms offering leveraged, margined, or financed crypto trades to retail customers.

Platforms not offering leverage could remain under state licenses, though the agency’s broad interpretation of “leverage” could extend federal oversight to fully paid trades unless customers take physical delivery of their assets.

Selig, previously chief counsel for the SEC’s Crypto Task Force, indicated last month that the regulator is preparing for markets operating “24-7, on-chain.” Both the CFTC and the Securities and Exchange Commission have adopted a more accommodative stance toward crypto regulation since President Donald Trump assumed office.

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