New cryptocurrency trading rules by the U.S. Commodity Futures Trading Commission (CFTC) may be proposed only by late in the first quarter or early in the second quarter of 2027 at the earliest, and implementation of the final version could slip into early 2028.

On Oct. 13, blockchain outlet Cryptopolitan reported that investment bank TD Cowen said in a memo that the CFTC's regulatory overhaul was likely to be prolonged.

Jaret Seiberg, a managing director at TD Cowen's Washington Research Group, said even in the best-case scenario an official proposal would come in late in the first quarter or early in the second quarter of 2027. He expected final rules to come only in the first few months of 2028.

The CFTC began a pre-rulemaking notice process on Oct. 5. At this stage, it discloses the regulatory direction and solicits views from markets and the public. Once the notice is published in the Federal Register, the comment period runs for 60 days. After that, the CFTC still must issue a formal proposal and finalize the rules.

The delay outlook is also tied to a legislative vacuum in Congress. With the crypto bill blocked in the Senate, the CFTC is building a regulatory framework directly based on its existing authority. CFTC Chairman Michael Selig said Congress has not sent a bill to the president, but the CFTC already has legal authority to create a federal-level structure for the crypto market.

If the Clarity Act had passed, the CFTC and the U.S. Securities and Exchange Commission (SEC) would have divided oversight, and spot exchange registration would have been required by law. The bill failed on Sept. 15 in a Senate cloture vote, 49-50, falling short of the 60 votes needed to advance to the full chamber. Since then, the two agencies have been moving to use existing powers such as innovation exemptions.

Two core rules the CFTC is pursuing target margin and leveraged trading by retail investors. 'Regulation CTX,' meaning crypto trading, defines which transactions the CFTC will treat as subject to oversight. 'Regulation CAM,' covering crypto markets, would create a federal-level exchange licence for platforms that handle it. Both rules exclude general spot trading from their scope.

This leaves a key gap in the U.S. crypto market intact. Under the Commodity Exchange Act, the CFTC cannot broadly regulate the spot market without congressional action. In the spot market it can exercise only enforcement authority over fraud and market manipulation, while actual trading operations are left to state money-transmitter licensing systems. Many U.S. crypto platforms currently operate under these state-level money-transmitter licences, and New York state runs a separate BitLicense system.

Regulatory pressure on platforms could increase. Seiberg said platforms subject to the new rules would need to undergo audits of proof of reserves. He also raised the possibility that the CFTC could expand oversight to cover trading venues currently operating with state authorisations.

A warning also emerged that the more the process is accelerated, the greater the risk of legal disputes. Seiberg called the pre-rulemaking notice a "good starting point" for crypto platforms, but said the process could continue until 2028, when a presidential election will be held. He said rules made by one administration could be reversed by the next. "Even if the agency moves cautiously, legal challenges could continue beyond 2028," he said.

In this situation, the CFTC's regulatory overhaul largely aims to fill the legislative vacuum, but limits on spot market oversight and judicial risk remain at the same time. As a result, the federal regulatory framework for the U.S. crypto market has more variables to watch than the timing of a proposal, including finalisation of the rules and court rulings.