The incoming administration of President-elect Donald Trump plans to reshape the regulatory framework for cryptocurrency in the United States by granting the Commodity Futures Trading Commission (CFTC) the authority to regulate digital assets, including Bitcoin and Ethereum.
If Congress approves, the CFTC's expanded role will regulate the spot market for digital commodities and oversee cryptocurrency exchanges. This is in stark contrast to the SEC's more stringent approach. While the CFTC tends to adopt a lighter regulatory touch due to its focus on the institutional market.
Former CFTC Chairman Chris Giancarlo expressed confidence in the commission's ability to manage this expanded oversight authority and stated:
“With adequate funding and the right leadership, I think the CFTC can start acting immediately to regulate digital commodities from day one of Donald Trump's presidency.”
Furthermore, the current regulatory backdrop of the CFTC notably oversees the $20 trillion U.S. derivatives market with a fraction of the SEC's budget and personnel. The expanded role will require more resources to ensure effective oversight.
Additionally, the proposed regulatory framework is expected to enhance trust in the cryptocurrency market among institutional investors. It provides a clear framework for the regulation of digital assets. The proposed changes aim to better understand and bolster innovation in the $3 trillion digital asset market with 50 million traders.
It is important to emphasize that this initiative aligns with Donald Trump's pro-cryptocurrency stance. It includes plans for a federal Bitcoin reserve fund and the dismissal of Gary Gensler. Recently, Gensler announced plans to resign as SEC Chairman on January 20, 2025.