CFTC Chair Mike Selig said on Wednesday that a new federal registration category for crypto exchanges would prevent another FTX-style collapse, four years after $8 billion in customer funds vanished when Sam Bankman-Fried's exchange failed.

Speaking on Fox Business Network's Varney & Co., Selig argued that bringing digital-asset spot trading under Commodity Futures Trading Commission oversight will install the same segregation protections that preserved customer assets at FTX's CFTC-registered subsidiary.

"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.

What did the CFTC actually propose?

The CFTC requested public comment this week on a framework that would create a new registration category called a "crypto asset market." The designation targets exchanges offering leveraged, margined or financed crypto trades to retail customers.

The agency is acting without new legislation after lawmakers blocked the long-awaited Clarity Act last month. Both the CFTC and the Securities and Exchange Commission have adopted a more permissive posture toward crypto since President Donald Trump took office.

What does the rule cover?

Selig told viewers that registered exchanges would face the CFTC's existing segregation standards — the same rules he credited with protecting the U.S. customer book at FTX.

"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," Selig said.

Key operational points from the framework:

• Retail exchanges offering leveraged, margined or financed trades fall under the proposed federal regime
• Venues operating without leverage may remain on state licenses
• The CFTC reads "leverage" broadly, which may capture even fully paid retail trades unless customers take delivery
• Firms can choose federal or state pathways, but the federal route imposes segregation and capital standards

Why the leverage definition matters

The breadth of the leverage definition is the operational hinge of the proposal. By tying federal oversight to the absence of delivery — rather than the presence of borrowing — the CFTC has drafted a rule that could pull a large share of U.S. retail spot trading onto its books. Compliance teams at major exchanges now face a binary: restructure product flow so customers take delivery, or register federally.

Selig, who previously served as chief counsel to the SEC's Crypto Task Force, signaled last month that the CFTC is also preparing for trading to migrate "24-7, on-chain." That transition would reshape the agency's surveillance obligations, since continuous settlement alters how the CFTC monitors positions, margin and liquidation.

What's the timeline?

The CFTC has opened a public-comment period on the proposed "crypto asset market" framework. The agency's next step will be to review submissions and publish a revised proposal, a process that historically takes several months at the Commission. Selig framed the registration option as voluntary for compliant venues, but the broad leverage language leaves little practical route for large retail platforms that want to avoid federal oversight.