USCA4 Appeal: 25-1892
Doc: 16
Filed: 10/15/2025
Pg: 67 of 97
transactions conducted on a registered entity , ” and the new provision
clarified that “the CEA supersedes and preempts State gaming and bucket
shop laws” as to exempt transactions. H.R. Rep. 106-711, pt. 2, at 71
(emphasis added).
Congress has since expanded the scope of Section 16(e)(2) to include other types of transactions exempted from the CEA. See 7 U.S.C. § 2(c)(1)
(transactions in “foreign currency,” “government securities,” and
“mortgages” exempted from the CEA); § 2(f) (any “hybrid instrument that is
predominantly a security” exempted from the CEA); §§ 27-27f (certain
“banking product [s] ” exempted from the CEA). 3 Each of these cross- referenced transactions need not occur on DCMs — exactly why Congress
needed to specify that state laws are preempted. It would have been
redundant and confusing to specify preemption as to transactions on DCMs;
Section 2(a) already accomplished that. Fourth , the district court cited precedent holding that “Congress’s
preemptive intent ” in the CEA “had limits.” JA168. That much is correct:
The CEA does not preempt state regulation of most off-exchange trading, 7
3 Section 16(e)(2) also cross-references Section 2(e), which until 2010 excluded transactions between “electronic trading facilities” from the CEA. Congress in 2010 eliminated that exclusion, but inadvertently did not eliminate the cross-reference. See 124 Stat. 1376, 1722 (2010).
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