According to media reports, the administration of President-elect Donald Trump is planning to expand the supervision of the Commodity Futures Trading Commission (CFTC) over the cryptocurrency market.
The move, aimed at scaling back the regulatory influence of the U.S. Securities and Exchange Commission (SEC), could position the CFTC to become the primary regulator for Bitcoin (BTC) and Ethereum (ETH).
CFTC is the Preferred Cryptocurrency Regulator
According to Fox Business, the Trump administration wants to reshape management responsibility. In particular, empower the CFTC to regulate spot markets for Bitcoin and Ethereum. These two assets, with a combined value of about $2.24 trillion, account for 70% of the global cryptocurrency market.
By classifying them as commodities, the CFTC’s lighter regulatory approach—traditionally applied to the derivatives and commodities markets—could appeal to industry shareholders looking for reduced barriers to innovation.
Former CFTC Chairman Christopher Giancarlo, widely known as “Crypto Dad,” has expressed support for expanding the agency’s role.
“With the right funding and under the right leadership, the CFTC could quickly begin regulating digital commodities from day one of President Donald Trump’s term,” Fox Business reportedquoting Giancarlo.
This proposal is consistent with the Republican priority of promoting innovation and reducing regulatory barriers. It also reflects dissatisfaction with the SEC’s enforcement-based approach under outgoing Chairman Gary Gensler, whose tenure was marked by aggressive sweeps of cryptocurrency companies.
Resolving Uncertainty in Management
The SEC and CFTC have long debated the classification of digital assets, leading to fragmented and often conflicting oversight. While the SEC considers most cryptocurrencies to be securities, the CFTC considers Bitcoin and Ethereum to be commodities. This inconsistency has created a gray area in management, stifling development and pushing crypto businesses into more favorable regulatory areas.
If implemented, the plan could also reduce disputes between agencies. CFTC Chairman Rostin Behnam previously asserted regulatory authority over Ethereum. In citing its trading as a futures contract, the agency demonstrated its desire to become more deeply involved in digital asset management.
In conjunction with the Trump administration’s push to empower the CFTC, a newly proposed bipartisan initiative—the “BRIDGE” Digital Assets Act—seeks to create a framework for cooperation between the SEC and CFTC. Sponsored by Tennessee Senator John Rose, the legislation introduces a joint advisory committee of 20 representatives from the private sector.
“The current heavy-handed, authority-based regulatory approach is ineffective and is discouraging investment in this disruptive technology abroad,” the bill said. declare.
By promoting collaboration, the committee aims to harmonize regulatory policies and provide a clear path for links between industry and government. Such a collaborative approach could resolve past conflicts between agencies.
For example, the SEC’s declaration in 2023 that all Proof-of-Stake (PoS) tokens are securities conflicts with the CFTC’s designation of Ethereum as a commodity. A unified framework will clarify legal authority, providing necessary guidance for crypto companies and investors.
The crypto community has largely welcomed the idea of CFTC regulation, seeing the agency as a more comfortable option than the SEC.
“The SEC will no longer be able to clamp down on the crypto market… Operations of [CFTC] more lightly regulated, as derivatives markets are dominated by institutional investors with better risk management capabilities,” one user comment.
However, concerns remain about the CFTC’s ability to handle expanded liability. With an annual budget of $400 million and a staff of 700—significantly smaller than the SEC’s $2.4 billion budget and 5,300 employees—the CFTC will need significant resources and funding to provide oversight. Crypto spot market efficiency.
Additionally, some of the CFTC’s traditional stakeholders, such as agricultural commodity traders, have expressed concerns about the potential effects of the agency’s involvement in the technical market. number. Legislative language that addresses these concerns will be key to securing bipartisan support.