The upcoming Trump administration is reportedly considering assigning the CFTC, rather than the SEC, to oversee the cryptocurrency market.
The upcoming administration of former President Donald Trump is considering a significant change in the regulation of the cryptocurrency industry in the U.S. According to information from Fox Business on November 26, the Commodity Futures Trading Commission (CFTC) is likely to be tasked with overseeing this market, replacing the Securities and Exchange Commission (SEC). If implemented, this move would mark a significant shift in power in the financial technology sector.
Specifically, the CFTC is expected to be responsible for regulating the spot market for digital assets classified as commodities, as well as the operations of cryptocurrency exchanges. Mr. Trump's team believes that the SEC's hardline approach in recent times has stifled innovation and development in the cryptocurrency sector in the U.S. They argue that a more flexible regulatory approach from the CFTC would facilitate the industry's growth.
Impact on the cryptocurrency industry
The potential for the CFTC to become the primary regulatory agency for the cryptocurrency industry is seen as a major victory for the cryptocurrency community. For a long time, the CFTC has been regarded as a more favorable option compared to the SEC, as they are perceived to have a more moderate and fair approach.
Mr. Chris Giancarlo, former Chairman of the CFTC, shared with Fox Business that with adequate financial resources and proper leadership, the CFTC could start regulating digital commodities from the very first day Mr. Trump takes office.
Mr. Giancarlo has previously worked to urge the Senate Agricultural Committee, the overseeing body of the CFTC, to support granting the CFTC the authority to oversee the cryptocurrency spot market. He emphasized that the CFTC officially recognized Bitcoin as a commodity in 2015 and approved Bitcoin options in December 2017 under his leadership.
The current Chairman of the CFTC, Mr. Rostin Behnam, is also known for his pro-cryptocurrency stance. He has proposed that the Senate Agricultural Committee increase the budget for the CFTC so that the agency can more effectively regulate the cryptocurrency market. Currently, the CFTC's operating budget is only $706 million, significantly lower than the SEC's budget of $3 billion for fiscal year 2024. This disparity in resources is also evident in the number of employees: the CFTC has only about 700 employees, while the SEC has up to 5,300 employees.
A notable point is that about 50% of the CFTC's enforcement actions in 2024 targeted cryptocurrency businesses, a figure that Mr. Behnam described as 'remarkable' for an agency that has not been officially tasked with regulating this industry. Some of these actions targeted cryptocurrency companies not based in the U.S.
Meanwhile, the SEC is preparing for a leadership change. Chairman Gary Gensler has confirmed he will resign on January 20, 2025, coinciding with the day Mr. Trump takes office. SEC Commissioner Jaime Lizárraga will also resign on January 17 for personal reasons.
