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CFTC opens 60 days of public comment on crypto rules it has yet to propose
CFTC on Oct. 5 opened 60 days of public comment on an advance notice of rulemaking for crypto asset transactions. Comments land before any rule is proposed, so firms with digital-asset exposure get their earliest say on any rules the commission writes.
The Board Room · Leadership desk
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What happened
- Bitcoin.com reports US agencies are writing operational crypto rules after Congress failed to pass the CLARITY Act, and the CFTC is the latest to move.
- Bitcoin rallied to an intraday peak of $86,969 before giving back most of the gain to trade near $85,200.
- The swings liquidated more than $109 million in leveraged bitcoin positions over 24 hours, $62 million of it in short bets, according to Coinglass data.
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Why it matters
- constraint Publication on any October date puts the deadline in December, so a firm's comment letter has to be drafted and approved inside the quarter the notice appeared.
- exposure A letter filed at this stage puts a firm's position on the public record before the commission has shown any proposed language.
- precedent With crypto rules arriving through agencies one at a time, firms can expect a separate comment calendar from each regulator that follows the CFTC.
An advance notice of proposed rulemaking comes before any proposed rule, as its name says [1]. The CFTC said it intends to use the feedback to inform potential future agency action or rulemaking [3]. That leaves open whether a proposed rule follows at all [3]. We do not know yet which specific questions the notice asks. Bitcoin.com describes its subject only as crypto asset transactions [1].
For a firm with digital-asset exposure, the trade-off is influence against information. A letter filed in this window can affect which questions the commission carries into drafting, at a point when the firm knows little about where the commission is heading [3]. Waiting for a proposed rule gives the firm actual language to argue against. By that stage the commission has already decided what it intends to regulate and in what terms.
The deadline counts from publication [2]. If the notice was published on Oct. 5, the day the commission announced it, comments are due by Dec. 4 [11]. If publication slipped to the last day of October, the close would move to Dec. 30 [13].
Chairman Michael S. Selig said the move "is a critical step in the CFTC's ongoing efforts to ensure America remains the crypto capital of the world" [4]. His sentence states a goal. According to Bitcoin.com, US agencies are now the ones writing operational crypto rules [5]. If the CFTC moves to a proposed rule, the comments filed in this window are the first record it will draft from [3].
The price action runs on a shorter clock. In its latest reversal, bitcoin fell from $86,615 to $85,503 in less than 20 minutes [8], a drop of $1,112 [12]. As of 1:05 p.m. EST its market capitalization was virtually unchanged from 24 hours earlier, at $1.71 trillion [10]. Bitcoin.com wrote that the agencies' move is "widely interpreted as a long-term tailwind for digital asset adoption" [14]. I think that judgement depends on rule text the CFTC has yet to propose, and the first input to that text is due within 60 days of the notice's publication [2][3].
The choice made this quarter decides where a firm stands when a proposed rule arrives, if one does [3]. A firm that files can test that rule against its own letter. A firm that waits will be answering a draft shaped by the letters other firms sent.
What to watch
- The publication date of the CFTC's advance notice, which sets the actual comment deadline.
- Whether other US agencies open their own crypto comment processes in the wake of the CLARITY Act's failure.
- Whether the CFTC follows with a proposed rule, and how closely its text tracks the questions in the advance notice.