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The incoming Donald Trump administration is considering handing over the reins of crypto regulation to the Commodity Futures Trading Commission (CFTC), signaling a major shift in the United States’ approach to overseeing digital assets.
Sources cited by Fox Business on November 26 indicate that President-elect Trump’s team sees the Securities and Exchange Commission’s (SEC) stringent enforcement actions as stifling innovation in the crypto space. The move could strip the SEC of some of its power and position the CFTC as the primary regulator of digital assets and crypto exchanges.
Industry leaders have long favored the CFTC for its perceived fairness and lighter regulatory approach. Former agency Chairman Chris Giancarlo stated that, with proper funding and leadership, the agency could quickly step into its role as the regulator of digital commodities once Trump takes office. Giancarlo highlighted the CFTC’s early recognition of Bitcoin as a commodity in 2015 and its approval of Bitcoin options in 2017 as evidence of its suitability to regulate the sector.
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CFTC Struggles
Despite its potential new mandate, the regulator faces challenges. Its $706 million budget for 2024 is dwarfed by the SEC’s $3 billion allocation, and the agency employs just 700 staff compared to the SEC’s 5,300. Yet, CFTC Chair Rostin Behnam has emphasized the need for additional resources to oversee the crypto market more effectively, arguing that enforcement alone is insufficient for comprehensive regulation.
Interestingly, nearly half of the CFTC’s enforcement actions in 2024 targeted crypto businesses, reflecting the growing complexity of the industry. Some of these actions involved foreign-based entities, underscoring the global nature of the challenges the CFTC faces.
A Changing Guard at the SEC
This potential regulatory shift coincides with leadership changes at the SEC. Chair Gary Gensler has announced his resignation, effective January 20, 2025, as Trump assumes office. SEC Commissioner Jaime Lizárraga will also step down days earlier, citing personal reasons. These departures could further smooth the transition of regulatory oversight to the CFTC, marking a new chapter for crypto regulation in the United States.
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If realized, this move could be a major win for the crypto industry, potentially fostering growth and innovation under a more favorable regulatory environment.
