The U.S. Commodity Futures Trading Commission (CFTC) has approved a proposal from the Global Markets Advisory Committee (GMAC) allowing the use of blockchain technology (including distributed ledgers and tokenization) to manage non-cash collateral. This marks progress for the U.S. in digital asset regulation. (Background: Trump nominates Bitcoin enthusiast Howard Lutnick as Secretary of Commerce; will the new SEC chairman be a crypto-friendly lawyer?) (Further context: Breaking! SEC Chairman Gary Gensler announces he will step down on January 20, ending the era of high-pressure regulation on cryptocurrencies?) According to a report by Fox Business citing informed sources, President-elect Trump, who will take office next January, aims to expand the CFTC's authority to regulate cryptocurrencies, planning to grant the agency regulatory oversight over a significant portion of the $3 trillion digital asset market. With Trump's administration and the growing influence of the crypto industry in a Republican-controlled Congress, how the CFTC's regulatory powers will indeed expand to include the spot market for "digital assets viewed as commodities" (such as Bitcoin and Ethereum) and the exchanges facilitating these asset trades, is likely to weaken the SEC's regulatory authority under the leadership of current Chairman Gary Gensler (who has announced he will step down after Trump takes office), through enforcement actions over the digital asset industry. Extended reading: a16z examines U.S. Web3 regulation: Are the U.S. SEC and CFTC both terrible? The Trump administration plans to have the CFTC regulate the cryptocurrency spot market. According to sources directly familiar with Trump's team's ideas, more than 50 million people hold digital assets, and key aides in the Trump administration believe that regulatory relaxation is needed to stimulate innovation in the cryptocurrency business, including transformative blockchain technology that can eliminate costly intermediaries in commercial transactions. As Congress has yet to decide whether the SEC or CFTC has clear jurisdiction over cryptocurrency spot market trading, the two regulatory agencies have been vying for relevant authority in recent years. Although the CFTC has also asserted its regulatory authority over digital assets through enforcement actions in recent years, it is generally perceived that the CFTC's regulation is less strict than that of the SEC, which has been harsher on the cryptocurrency industry. Therefore, the U.S. cryptocurrency industry favors the CFTC as the primary regulatory body. Currently, the CFTC is often referred to as the "little sister" of the SEC, responsible for regulating a $20 trillion U.S. derivatives market, including futures, options, and commodities trading such as gold, oil, and wheat. Like the SEC, the CFTC has the authority to set market rules and initiate enforcement cases. CFTC's former chairman is rumored to become the cryptocurrency czar. Against this backdrop, Chris Giancarlo, who served as CFTC chairman during Trump's first term and was dubbed "crypto-dad" by the community, has expressed support for the CFTC regulating the cryptocurrency spot market viewed as commodities. "With sufficient funding and the right leadership, I believe the CFTC can start regulating 'digital commodities' on the first day of Trump's presidency." Notably, according to Fox Business last week, Giancarlo, a key member of Trump's transition team, may take on the role of the first-ever "cryptocurrency czar" in the new government. He was previously considered a strong candidate for the new SEC and CFTC chair positions, but seems to have withdrawn from the competition for both roles in recent weeks and expressed an open attitude towards the "cryptocurrency czar" role. Previously, Trump had stated during his campaign that he would establish a presidential advisory committee on cryptocurrencies to launch a new era of crypto-friendly policies and legislation within the first 100 days of his presidency, with the community jokingly dubbing this position as akin to a cryptocurrency czar, which would help execute crypto policies and possibly oversee an industry-led advisory committee. Giancarlo has long called for Congress to allow the CFTC to play a larger role in cryptocurrency regulation; he previously wrote a letter to the Senate Agriculture Committee overseeing the CFTC in 2022, supporting the CFTC's authority to regulate cryptocurrency spot markets. Source: J. Christopher Giancarlo Related reports: Gary Gensler questions the CFTC's capability to regulate cryptocurrencies, with staff numbers less than 20% of the SEC; CFTC approves 'tokenization' of non-cash collateral in the derivatives market, accelerating the embrace of blockchain (FIT21 Crypto Act) which could make America's Web3 industry great again? CFTC Commissioner: The regulatory process will be lengthy... Will Gary Gensler deliver a farewell speech? What cryptocurrency regulatory policies will the SEC adopt under Trump 2.0? "Trump administration reportedly to let CFTC lead cryptocurrency regulation, weakening SEC, with crypto-dad becoming a popular candidate for cryptocurrency czar." This article was first published by BlockTempo (the most influential blockchain news media).

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