The Trump administration is set to make a significant change in US crypto regulation by expanding the authority of the Commodity Futures Trading Commission (CFTC) to oversee a large portion of the $3 trillion digital asset market. This move aims to shift from the current enforcement-heavy approach to a more innovation-friendly framework, as reported by Fox Business on Nov. 28.
Under the proposal, the CFTC would be responsible for regulating spot markets for digital commodities like Bitcoin and Ethereum, which make up around 70% of the global crypto market. Additionally, the plan includes overseeing the exchanges where these assets are traded. Currently, there is no clear federal agency with jurisdiction over spot crypto transactions, leading to regulatory uncertainty.
Advocates of the proposal believe that the CFTC’s expertise in derivatives markets makes it well-suited to regulate digital commodities. The agency is known for its lighter regulatory touch compared to the Securities and Exchange Commission (SEC), which has faced criticism for its strict policies under outgoing Chair Gary Gensler. Former CFTC Chairman Chris Giancarlo, a key proponent of clearer crypto regulations, expressed confidence in the agency’s ability to take on this expanded role.
This move is part of President-elect Donald Trump’s broader initiative to restructure US financial regulation. Republican lawmakers have been critical of the SEC’s aggressive stance on digital assets, including classifying most cryptocurrencies as securities. With the aim of promoting innovation, the Trump administration seeks to revamp the SEC’s leadership and operations, potentially aligning the agency with a more pro-innovation agenda.
However, for the CFTC to regulate spot crypto markets, Congressional approval and increased funding would be necessary. The agency’s current budget and staffing levels are significantly lower than those of the SEC, prompting calls for additional resources to meet the growing responsibilities. While the proposal has garnered support from the crypto community, concerns have been raised by industry experts and traditional CFTC stakeholders about potential impacts on other commodity markets, such as agriculture.
Giancarlo emphasized the importance of precise legislative language to ensure that the new mandate does not disrupt existing oversight structures. As discussions continue, the crypto industry awaits further developments on the potential expansion of the CFTC’s regulatory authority in the digital asset market.