CFTC Rescinds No-Deny Rule as Crypto Enforcement Shift Widens

The U.S. Commodity Futures Trading Commission has rescinded its long-running “no-deny” policy for enforcement settlements. The rule, adopted in 1998, blocked the agency from accepting settlement offers when a defendant continued to deny allegations in a complaint or administrative order.

The CFTC said the old policy may have created the view that the agency wanted to “shield itself from criticism.” Chairman Michael Selig said the Commission had used the rule for nearly three decades and was now moving “consistent with regulators throughout the government.”

The decision follows a similar shift at the U.S. Securities and Exchange Commission. The SEC removed its own no-deny settlement rule in May, ending a policy first adopted in 1972 that limited public denials after enforcement settlements.

How the No-Deny Rule Shaped Settlements

Under the old policy, a defendant settling a CFTC charge could not publicly dispute the underlying facts, even if the settlement included no admission of guilt. The practical effect was that a settlement functioned as a de facto admission in the court of public opinion, even when the legal document said “neither admitted nor denied.”

Crypto firms have long criticized that language. The rule limited the ability of defendants to explain their side of a case after paying a penalty. A company that settled a minor disclosure issue could not correct the public record, creating a reputational penalty that sometimes exceeded the fine itself.

The CFTC’s Own Justification

The agency acknowledged the problem directly. The CFTC said the no-deny rule may have created the perception that the Commission wanted to avoid scrutiny. Chairman Selig described the change as bringing the CFTC in line with other federal regulators.

The SEC Precedent and Bilateral Shift

The SEC removed its no-deny rule in May. SEC Chair Paul Atkins said that change ended a restriction on criticism of the agency. Commissioner Hester Peirce argued that allowing both sides to speak openly would support clearer enforcement records.

The CFTC decision follows that same logic. The two agencies now share a common posture: defendants can settle without surrendering the right to deny the allegations publicly.

What This Means for Coordination

Crypto firms that face enforcement from both agencies previously faced a bind. A settlement with one agency could include a no-deny clause that conflicted with the ability to contest allegations at the other. The parallel repeal removes that friction for future cases.

The Gemini Case as a Catalyst

The timing of the CFTC decision follows renewed attention on Gemini. The exchange agreed in January 2025 to pay $5 million to settle CFTC charges tied to alleged misleading statements linked to a Bitcoin futures product. Gemini settled without admitting or denying the allegations.

The CFTC has since asked a federal judge to vacate the prior order against Gemini. Reuters reported that Gemini agreed not to seek a refund of the $5 million penalty, while the agency now says the false-statement case should not have been brought.

Selig has described the Gemini case as “politically targeted,” according to recent reports. The CFTC also said it will not enforce existing no-deny provisions in prior settlements. That means Gemini and other past defendants may now speak freely about cases they settled under the old regime.

What the New Policy Does Not Change

The agency said the new approach does not remove its discretion to seek admissions of facts or liability in future enforcement deals. The CFTC can still pursue enforcement actions, seek penalties, and negotiate admissions where the facts or public record require them.

What the Shift Means for Crypto Firms

For crypto companies, the change may affect how future CFTC settlements are drafted. It does not erase past investigations or rewrite commodity law. It changes the speech terms attached to many enforcement resolutions.

The Naive Read

A naive reading is that the CFTC has gone soft on enforcement. The agency itself rejects that interpretation. The CFTC can still demand admissions of fact or liability when the case warrants it. The rule change simply removes a blanket prohibition on public denials.

The Better Market Read

The better read is that the CFTC is reducing the collateral cost of settlement. Under the old rule, a crypto firm that settled a minor disclosure issue could not correct the public record. That created a reputational penalty that sometimes exceeded the fine itself. The new policy lets firms settle without accepting a permanent branding as a bad actor.

This matters for crypto exchanges, lending platforms, and token issuers that operate in the gray zone between commodities and securities. A settlement under the old rule could lock in a narrative that the firm was fraudulent. Under the new rule, the same firm can settle and still argue its case in public.

Risk to Watch: Selective Admissions

The CFTC retains discretion to demand admissions. The risk is that the agency uses that discretion unevenly. A firm that refuses to admit facts may face a longer litigation timeline or a higher penalty. The new policy does not guarantee equal treatment.

Affected Assets and Forward-Looking Markers

The direct market impact is limited. The rule change does not alter commodity classification, token registration, or exchange licensing. It affects the enforcement process, not the underlying legal framework.

A secondary effect may reduce stock price volatility that follows CFTC settlements. Under the old rule, a settlement announcement often triggered a sell-off because investors assumed the worst. Under the new rule, a firm can immediately push back, which may limit the downside.

Timeline for the Shift

The CFTC decision is effective immediately. The agency will not enforce existing no-deny provisions in prior settlements. New settlements will be drafted without the no-deny clause unless the CFTC specifically demands admissions.

What Would Confirm the Thesis

A crypto firm settles a CFTC charge and publicly denies the allegations without facing additional agency action.

The CFTC issues a settlement that includes a specific admission of fact, showing it still uses that tool when warranted.

The SEC follows with a similar clarification on its own no-deny repeal.

What Would Weaken the Thesis

The CFTC demands admissions in a routine settlement, signaling that the new policy is narrow in practice.

A court ruling limits the ability of defendants to deny allegations after settlement, creating legal risk for firms that speak out.

The SEC or CFTC reimposes a no-deny requirement through a different mechanism, such as a consent decree term.

The CFTC decision is a procedural change with real consequences for how crypto firms manage enforcement risk. It does not rewrite the rules of the road. It changes the cost of stopping at a checkpoint. For a broader view of how regulatory shifts affect crypto markets, see AlphaScala’s crypto market analysis.