CFTC to potentially lead digital asset regulation under Trump administration

The Trump administration aims to replace the SEC's stringent crypto policies with CFTC's innovation-led oversight.

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The Trump administration is planning to expand the Commodity Futures Trading Commission’s (CFTC) authority to oversee significant portions of the $3 trillion digital asset market, Fox Business reported on Nov. 28.

The move would mark a pivotal shift in US crypto regulation, aiming to replace the current enforcement-heavy approach with a more innovation-friendly framework.

CFTC to regulate crypto

The proposal would assign the CFTC oversight of spot markets for digital commodities, including Bitcoin and Ethereum, which account for about 70% of the global crypto market.

The plan also includes regulating the exchanges where these assets are traded. Currently, no single federal agency has clear jurisdiction over spot crypto transactions, leading to regulatory uncertainty.

Supporters argue that the CFTC’s expertise in derivatives markets makes it well-suited to oversee digital commodities. The agency is known for its lighter regulatory touch compared to the Securities and Exchange Commission (SEC), which has faced criticism for its stringent policies under outgoing Chair Gary Gensler.

Former CFTC Chairman Chris Giancarlo, a key advocate for clearer crypto regulations, highlighted the agency’s readiness to take on the expanded role.

Giancarlo told Fox Business:

“With adequate funding and under the right leadership, the CFTC could begin regulating digital commodities effectively from day one.”

The plan comes as part of President-elect Donald Trump’s broader effort to restructure US financial regulation. Republican lawmakers have long criticized the SEC’s aggressive stance on digital assets, which included labeling most cryptocurrencies as securities.

Under Gensler, the SEC’s enforcement actions created friction with the crypto industry, pushing many participants to favor the CFTC as a primary regulator. In response, Trump’s administration seeks to overhaul the SEC’s leadership and operations, potentially steering the agency toward a more pro-innovation agenda.

Funding and legislative Hurdles

For the CFTC to regulate spot crypto markets, Congressional approval, and increased funding would be necessary. The agency’s current budget of $400 million and staff of 700 pale in comparison to the SEC’s $2.4 billion budget and 5,300 employees.

CFTC officials, including outgoing Chairman Rostin Behnam, have repeatedly requested additional resources to address growing responsibilities.

While the proposal has gained traction within the crypto community, some industry experts and traditional CFTC constituencies worry about the potential spillover effects on other commodity markets, such as agriculture.

Giancarlo suggested that precise legislative language would be essential to ensure the new mandate does not disrupt existing oversight structures.

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