The Trump administration is considering expanding the authority of the Commodity Futures Trading Commission (CFTC) to oversee significant portions of the $3 trillion digital asset market, Fox Business reported on November 28.
The move would mark a crucial shift in U.S. crypto regulation, aiming to replace the current enforcement-heavy approach with a more innovation-friendly framework.
CFTC to regulate crypto
The proposal would have the CFTC oversee digital commodity spot markets, including Bitcoin and Ethereum, which make up about 70% of the global crypto market.
The plan also includes regulating the exchanges where these assets are traded. Currently, no federal agency has clear jurisdiction over spot crypto transactions, leading to regulatory uncertainty.
Supporters argue that the CFTC’s expertise in derivatives markets makes it well suited to oversee digital commodities. The agency is known for its lighter regulatory approach than the Securities and Exchange Commission (SEC), which was criticized for its strict policies under outgoing Chairman Gary Gensler.
Former CFTC Chairman Chris Giancarlo, a strong advocate for clearer crypto regulation, has emphasized the agency’s desire to take on an expanded role.
Giancarlo told Fox Business:
“With adequate funding and under proper leadership, the CFTC could begin effectively regulating digital products on day one. »
The plan is part of a broader effort by President-elect Donald Trump to overhaul U.S. financial regulations. Republican lawmakers have long criticized the SEC’s aggressive stance on digital assets, which included labeling most cryptocurrencies as securities.
Under Gensler, the SEC’s enforcement actions have created friction with the crypto industry, causing many participants to favor the CFTC as the primary regulator. In response, the Trump administration is seeking to overhaul the SEC’s leadership and operations, potentially moving the agency toward a more innovation-friendly agenda.
Funding and legislative obstacles
For the CFTC to regulate crypto spot markets, Congressional approval and increased funding would be required. The agency’s current budget of $400 million and 700 employees pale in comparison to the SEC’s $2.4 billion budget and 5,300 employees.
CFTC officials, including outgoing Chairman Rostin Behnam, have repeatedly requested additional resources to meet growing responsibilities.
Although the proposal has gained traction within the crypto community, some industry experts and traditional CFTC groups are concerned about potential ripple effects in other commodity markets, such as agriculture.
Giancarlo suggested that precise legislative language would be essential to ensure that the new mandate does not disrupt existing oversight structures.
