Author: 1912212.eth, Foresight News
Trump is set to officially take office on January 20, 2025. After winning the election this month, a series of personnel changes are also underway. According to the newly announced cabinet members, several are cryptocurrency holders, including Vice President J.D. Vance, Treasury Secretary Scott Bensinger, and Commerce Secretary Howard Lutnick, among others, which may also bring changes to the regulatory powers of the SEC and CFTC that are directly related to the crypto field.
On November 27, according to Fox News, the incoming Trump administration aims to expand the powers of the Commodity Futures Trading Commission (CFTC), granting it significant regulatory authority over a large portion of the $3 trillion digital asset market.
Why is the current SEC Chairman Gary Gensler planning to expand the CFTC's regulatory powers over the crypto market just as he is about to leave office?
The CFTC is authorized by the U.S. Congress to regulate the $20 trillion U.S. derivatives market, including futures, options, and the trading of physical commodities like gold, oil, and wheat. Like the SEC, the CFTC has the authority to establish market rules and take enforcement action, but since the derivatives market is primarily dominated by mature institutional investors rather than retail investors, it is generally considered to be more lenient in regulation compared to the SEC and better at managing risk.
Similarly, the SEC, as another important regulatory agency, is primarily responsible for overseeing the securities market, including stocks, bonds, mutual funds, and government bonds, with the main goal of protecting investors' interests, especially those of retail investors.
The EC considers most cryptocurrencies as securities and includes them within its jurisdiction, treating the regulation of the crypto market quite strictly. The SEC recently announced that its enforcement efforts for the fiscal year 2024 have reached a historic high, filing 583 enforcement actions and obtaining $8.2 billion in financial remedies, with numerous legal disputes this year in the cryptocurrency sector involving exchanges like Kraken, Ripple, market makers like Cumberland, Crypto.com, Opensea, Consensys, and others.
In contrast, the CFTC often holds a relatively open and friendly attitude towards emerging markets and new technologies. For example, the CFTC approved Bitcoin futures trading in 2017, but disputes over regulatory authority between the CFTC and SEC regarding whether many tokens in the crypto market are commodities or securities have arisen.
CFTC Chairman Behnam has stated that 'BTC and ETH have already been recognized by the courts as digital commodities, and 70%-80% of the crypto market is non-securities.' Thus, it is undoubted that some regulatory authority should belong to the CFTC and be primarily responsible for oversight. However, SEC Chairman Gary Gensler has made it clear on multiple occasions that securities laws apply to most crypto assets, and the SEC has the authority to regulate the crypto market.
Currently, among various lawsuits, the U.S. SEC still plays a leading role.
Currently, neither agency has established clear and specific rules for the crypto field; instead, they are more inclined to regulate the crypto market through enforcement actions, such as CFTC Chairman Behnam stating that about 50% of the agency's enforcement actions this year are against cryptocurrency companies.
While this has to some extent cracked down on many frauds and violations, it has also faced criticism and condemnation from various organizations in the crypto industry and many practitioners.
Currently, the Trump administration hopes to provide a clearer and more stable regulatory framework for the cryptocurrency market by expanding the CFTC's powers.
The CFTC may be responsible for regulating digital assets classified as commodities, such as Bitcoin and Ethereum, along with their spot markets, while the SEC continues to regulate those crypto assets considered securities. This division helps reduce market uncertainty, improve regulatory efficiency, and minimize regulatory overlap and conflict between the SEC and CFTC. As a highly anticipated crypto-friendly president, the ultimate decisions of Trump after taking office remain unknown, but the regulatory policies and frameworks under his influence may become clearer, thereby promoting market development.
