Washington Is Building Crypto Rules Without Waiting for Congress

Frank Joaquin

Date: October 6, 2026

Two federal actions on October 5 point in the same direction even though they move different parts of crypto regulation in opposite ways.

The Commodity Futures Trading Commission opened an Advanced Notice of Proposed Rulemaking for leveraged, margined and financed retail crypto transactions. The agency says it intends to use existing Commodity Exchange Act authority to develop rules for crypto asset transactions and a purpose-built category of registered venue called a crypto asset market. CFTC

Hours later, the Treasury Department’s Financial Crimes Enforcement Network withdrew two unfinished digital-asset proposals. One dated to December 2020 and would have imposed recordkeeping, verification and reporting requirements on certain transactions involving convertible virtual currency and unhosted wallets. The other, proposed in 2023, would have imposed a special measure on convertible virtual currency mixing. FinCEN.gov

These are separate agencies acting under separate statutes. Taken together, however, they show the federal crypto framework moving through administrative authority after Congress failed to complete comprehensive market-structure legislation.

The CFTC is using the authority it already has

The CFTC’s October 5 notice is narrower than a federal spot-market law. Section 2(c)(2)(D) of the Commodity Exchange Act gives the agency authority over certain retail commodity transactions involving leverage, margin or financing. The agency is using that lane to ask how it should prevent abusive practices, define crypto-specific compliance expectations and create a crypto asset market subcategory within its existing exchange framework. CFTC

Reuters reported that the proposed structure would allow crypto exchanges offering leveraged retail trading to opt into federal supervision instead of relying primarily on state money-transmitter licensing. The contemplated requirements include anti-manipulation controls and proof of reserves. Products involving leverage would need to clear the relevant CFTC process. Reuters

There is still a boundary the agency cannot erase by rule. Ordinary spot trading that does not involve leverage, margin or financing remains outside the comprehensive federal market authority that the failed CLARITY legislation would have supplied. CFTC Chairman Michael Selig has acknowledged that agency action cannot indefinitely substitute for a statute. CFTC

FinCEN is removing two rules rather than rewriting them

FinCEN’s action is more definitive. It withdrew both proposals instead of reopening them for amendment.

The 2020 unhosted-wallet proposal would have imposed additional recordkeeping, identity verification and reporting requirements on certain transactions involving convertible virtual currency or digital assets. The mixing proposal would have treated convertible virtual currency mixing as a class of transactions of primary money-laundering concern. FinCEN.gov

FinCEN said it considered public comments and withdrew both proposals as part of the administration’s deregulatory agenda and its effort to make digital-asset regulation fit for purpose. FinCEN.gov

The withdrawal does not legalize money laundering, immunize mixers, or eliminate existing Bank Secrecy Act obligations. It removes these two proposed regulatory mechanisms. Existing sanctions, anti-money-laundering laws and criminal authorities remain separate questions.

The emerging model is selective federalization

Token Recon’s reading of the October 5 record is that Washington is not simply deregulating crypto.

The CFTC is attempting to add a federal supervisory lane where it believes existing law permits one. FinCEN is deleting proposed requirements it no longer considers appropriate. The SEC has separately been developing crypto custody and tokenized-securities frameworks. The result is an agency-built structure that expands some federal pathways while narrowing others.

That model has an obvious weakness. Rules grounded in existing statutes are constrained by the text of those statutes, and they can face court challenges over whether an agency exceeded the authority Congress actually granted. A future administration can also revisit regulations more easily than Congress can repeal a statute.

For crypto businesses, the practical consequence is that regulatory clarity may arrive product by product rather than through one market-structure law. Leveraged retail trading, custody, tokenized securities, stablecoins and anti-money-laundering obligations can develop on separate tracks with different legal foundations.

TOKEN RECON ASSESSMENT

October 5 is a useful marker because it shows the post-CLARITY strategy becoming operational rather than rhetorical. The CFTC is now asking for the record it needs to write crypto-specific rules under existing commodities law, while FinCEN has removed two proposals that would have expanded reporting obligations around self-hosted wallets and mixing.

The confirmation point is not another speech. It is the text of the rules that follow the CFTC comment process and the legal durability of those rules if challenged. Agency action can create a workable federal lane for parts of the market, but it cannot manufacture the full spot-market jurisdiction Congress declined to enact.