Trump administration considers transferring oversight of crypto to CFTC

In recent news, it has been reported that the incoming administration of Donald Trump is exploring the idea of granting oversight of the crypto industry to the US Commodity Futures Trading Commission (CFTC). This potential shift could mean a significant change in regulatory power, potentially moving some authority away from the Securities and Exchange Commission (SEC).

According to sources familiar with the matter, the CFTC could take on the responsibility of regulating spot markets for digital assets classified as commodities, as well as overseeing crypto exchanges. The Trump team believes that the SEC’s enforcement actions have put a damper on crypto innovation in the US and that a more relaxed approach is necessary to foster growth.

If the CFTC does indeed gain regulatory control over the crypto industry, it could be seen as a positive development for the sector. Many in the industry view the CFTC as a fairer regulator with a lighter touch, making it a preferred choice. Former CFTC chair Chris Giancarlo expressed optimism, stating that with the right resources and leadership, the CFTC could swiftly begin regulating digital commodities under a Trump presidency.

Giancarlo has been an advocate for the CFTC’s oversight of the spot crypto market, highlighting the agency’s classification of Bitcoin as a commodity back in 2015. During his tenure, the CFTC also approved Bitcoin options in December 2017. Current CFTC Chair Rostin Behnam, known for his moderate views on crypto, has requested additional funding from the Senate Agriculture Committee to enhance regulation of crypto markets.

In terms of resources, the CFTC operates on a budget of $706 million for fraud and market manipulation enforcement, significantly smaller than the SEC’s $3 billion budget. With only around 700 staff members, the CFTC’s enforcement actions against crypto businesses have accounted for roughly 50% in 2024, despite not having a mandate to regulate the industry.

As the SEC prepares for leadership changes, with Chair Gary Gensler set to resign on Jan. 20, 2025, and Commissioner Jaime Lizárraga stepping down on Jan. 17, the landscape of regulatory oversight in the crypto industry may be in for a shift. Behnam’s call for more effective regulation and the potential transition to CFTC oversight under Trump’s administration are developments worth keeping an eye on.