There is nothing like a new market that treats all participants the same, whether they are retail or institutional investors.

Trading in a single pool of liquidity simplifies price discovery and trading. However, a market fragmentation between retail and institutional trading may be on the horizon.

Recently the U.S. Commodity Futures Trading Commission released a proposal that would reign in retail trades on virtual currency exchanges that offer financed, leveraged, or margined trades.

Some in the industry view as a bookend to the regulator’s enforcement action against the operators of Hong Kong-based Bitfinex exchange, that permitted users to borrow funds from other users on the platform to trade bitcoins on a financed, leveraged, or margined basis.

Under the Dodd-Frank Act, financed commodity transactions – including digital currencies and tokens – must be conducted on an exchange, unless the entity offering the transactions can establish that “actual delivery” of the bitcoins results within 28 days.

The CFTC’s proposed interpretation, which is open for comments until mid-March, only affects individuals who are not eligible contract participants and participate on a financed, leveraged, or margined basis.

This distinction could be the initial crack in the market that will precipitate market fragmentation between retail and institutional trading.

Until now, virtual currency exchange operators did not need to differentiate clients by size or sophistication: It goes against the philosophy behind crypto-currencies.

But once digital currency exchanges start to segregate clients into retail and institutional investors, how long will it be before the exchange operators find it easier to offer one set of services and liquidity pool to one community and another set for the other?

It might not take that long before the digital currency market’s structure starts to resemble the equities market, where retail investors trade on the exchange and institutional orders trade upstairs.