TD Cowen: Leveraged Crypto Rules May Fail Before 2028

CFTC Proposes Framework for Leveraged Crypto Trading, Faces Durability Concerns

The Commodity Futures Trading Commission (CFTC) has initiated the development of a federal regulatory structure for leveraged retail cryptocurrency trading. However, TD Cowen analysts suggest that the timeline for establishing these rules may extend beyond the 2028 election cycle, raising questions about their long-term stability.

The core issue, according to TD Cowen, is that agency-created regulations are inherently less permanent than laws passed by Congress. If political priorities shift before the proposed framework is finalized, the entire initiative could be revisited or abandoned.

On October 5, 2026, the CFTC released an advance notice of proposed rulemaking (ANPRM). This notice seeks public input on a specialized federal framework for retail commodity transactions involving crypto assets that utilize leverage, margin, or financing.

The proposal comprises two key components. The first, dubbed Regulation CTX, aims to clarify which transactions fall under the CFTC’s jurisdiction, referencing Section 2(c)(2)(D) of the Commodity Exchange Act. The second component, Regulation CAM, would establish a distinct “crypto asset markets” category within existing designated contract market registrations. This would provide platforms offering leveraged crypto products with a specific regulatory pathway under federal oversight.

It is important to note that these proposals are not yet binding. The ANPRM will trigger a 60-day public comment period once published in the Federal Register, and it does not enact any rules at this stage.

TD Cowen’s primary concern revolves around the durability of these potential regulations. Analysts at the firm, including Jaret Seiberg, have highlighted that rules issued by agencies are more susceptible to change than congressional legislation. Future CFTC commissioners could amend or repeal these rules entirely.

CFTC Chairman Michael Selig has acknowledged the interim nature of this regulatory effort, describing it as a temporary measure to provide oversight while legislative progress remains stalled.

The CFTC’s current action follows the failure of a more comprehensive legislative attempt. The Clarity Act, which aimed to establish a broad market structure for cryptocurrencies, stalled in the Senate in September 2026.

With the legislative path obstructed, the CFTC has turned to its existing regulatory tools. The October 5 ANPRM was issued within weeks of the Senate’s setback.

Chairman Selig’s strategy is intended to consolidate these platforms under a unified federal framework, moving away from the current landscape where they must navigate a complex array of state-specific regulations.

For cryptocurrency platforms looking to offer leveraged products to U.S. retail customers, the ANPRM represents a significant opportunity. Regulation CAM, if enacted, would create a registration process specifically designed for their business models, rather than requiring them to fit into unsuitable existing categories.

Industry participants acknowledge that the regulatory process could extend into future election cycles, fueling concerns about market clarity and investor confidence.

TD Cowen’s analysis suggests that only legislative action can provide a truly lasting solution. Until lawmakers revisit initiatives like the Clarity Act, the CFTC’s regulatory actions are likely to serve as a provisional fix for a fundamental structural gap in the market.