CFTC’s Michael Passalacqua Reveals Plan B for Crypto Regulation After CLARITY Act Stalls

The CFTC’s October 5 proposal would create a route for a CFTC-regulated exchange to offer leveraged retail crypto trading under a federal framework. Renato Mariotti said the proposal relies on the agency’s specific authority over leveraged crypto exchanges; it does not resolve the CFTC’s uncertain jurisdiction over spot exchanges. Broader federal oversight could also displace the state-by-state money-transmission regime that crypto exchanges currently navigate, though the proposal’s reach and practical consequences remain subject to debate.

Michael Passalacqua described the proposal as a way for crypto asset exchanges to opt into a uniform national framework overseen by the CFTC. That approach follows bipartisan support, during the CLARITY Act process, for CFTC regulation of the industry. But it is not yet clear whether exchanges will consider the framework attractive for products that must meet Commodity Exchange Act requirements. The proposal was in a 60-day comment period, and Passalacqua urged the public and industry participants to submit comments.

The CFTC prepared for both outcomes during the CLARITY Act process: implementation plans in case the bill passed and a contingency plan if it did not. Passalacqua said the agency is ready to carry out rulemaking it prepared with the SEC, Treasury and other agencies, but is now putting its contingency plan into operation. He expects the next six to 12 months to focus on that work, including rulemaking concerning on-chain finance and innovative technologies. He cited the A&NPRM as an early example of the CFTC’s rulemaking process, rather than a final answer to the broader policy questions.

The agency’s innovation task force, launched in March, has advanced work on crypto assets and prediction markets, while it continues gathering information about superintelligence. The CFTC scheduled its inaugural Frontier Forum on superintelligence for October 28 and issued a request for comment on compute derivatives markets. Passalacqua framed the request as a way to improve the agency’s understanding of the market and related issues, not as evidence that the CFTC has settled how such markets should be regulated.

Passalacqua said the CFTC’s no-action position on introducing-broker registration provides relief to eligible participants across the industry, unlike a typical no-action letter, which generally applies to its recipient. He also pointed to relief related to Phantom and broader policy work on passive software providers as part of an effort to develop durable rules for software publishers. The policy challenge is to address regulatory obligations without treating every provider of passive software as equivalent to an intermediary actively conducting regulated activity.

The CFTC is also examining how its rules apply when AI- or superintelligence-enabled agents trade autonomously. Key unresolved questions include who bears responsibility for an agent’s actions and whether firms could be liable. Passalacqua said the agency is still gathering information on agentic finance and plans to discuss pressure points with builders and founders. It recently hired a data scientist to strengthen its capabilities in on-chain and agentic finance, signaling that the contingency agenda extends beyond crypto exchange rules to the technologies and market structures regulators may need to oversee.