Trump Considering Giving Crypto Oversight to CFTC – A Major Shift in Power?

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This article explores the potential shift in cryptocurrency regulation under a prospective Trump administration, focusing on the proposed transfer of significant oversight to the Commodity Futures Trading Commission (CFTC). This article analyzes the potential impact on the industry, the SEC’s diminished role, and the CFTC’s capacity to handle increased responsibility if this plan is implemented.

Table of Contents

A Potential Power Shift in Crypto Regulation

The upcoming Trump administration is reportedly considering a major overhaul of cryptocurrency regulation. Instead of the Securities and Exchange Commission (SEC), which has been actively involved in crypto regulation under the Biden administration, the plan involves granting the CFTC far more authority over the cryptocurrency market. This includes oversight of crypto exchanges and spot markets for cryptocurrencies classified as commodities, such as Bitcoin (BTC) and Ethereum (ETH).

The SEC is overseeing the crypto market

This move is driven by the belief within the Trump camp that the SEC’s approach has stifled innovation within the US crypto industry. The proposed shift to the CFTC is seen as a less stringent regulatory approach that fosters greater growth. The cryptocurrency industry largely favors this shift, seeing the CFTC as a more lenient and fair regulator compared to the SEC.

The CFTC’s Role and Resources: A Daunting Task?

The CFTC, currently responsible for regulating the $20 trillion derivatives market, would see its jurisdiction significantly expand to include the spot market trading of cryptocurrencies. This represents a massive undertaking. The CFTC’s current budget of $706 million and approximately 700 employees pale in comparison to the SEC’s $3 billion budget and 5,300 employees for fiscal year 2024. This stark difference in resources raises serious questions about the CFTC’s capacity to effectively oversee the multi-trillion dollar crypto market.

Will the CFTC replace the SEC in overseeing the crypto market?

Former CFTC Chairman Chris Giancarlo, a vocal proponent of expanding the CFTC’s role in crypto regulation, believes the agency is equipped to handle this expanded responsibility. He stated to Fox Business: “With adequate funding and the right leadership, I think the CFTC could be ready to start regulating digital commodities on day one of a Trump presidency.” Giancarlo’s optimism is partially based on the CFTC’s early involvement with Bitcoin, designating it as a commodity in 2015, and subsequent approval of Bitcoin options in 2017. He is even rumored to be a potential advisor on cryptocurrency policy for a Trump administration.

Current CFTC Chairman Rostin Behnam, while acknowledging Bitcoin and Ethereum as commodities, has also expressed concerns about unregulated aspects of the crypto space, such as Decentralized Finance (DeFi), and a commitment to investor protection through enforcement. Even with his pro-crypto stance, the resource disparity remains a significant hurdle.

Current CFTC Chairman Rostin Behnam

The SEC Under Fire: Gensler’s Departure and Trump’s Stance

As you know, Donald Trump has previously called for the removal of SEC Chairman Gary Gensler. Interestingly, just five days ago, Gensler announced his own resignation, effective January 2025. This timing, coinciding with the anticipated change in administration, adds another layer to the ongoing debate surrounding cryptocurrency regulation in the US. Gensler’s tenure has been marked by a stricter approach towards the crypto industry, which contrasts sharply with the proposed CFTC-centric approach under a potential Trump administration. His departure could pave the way for a more significant shift in regulatory priorities.

Donald Trump and Gary Gensler

A Direct Challenge to the SEC’s Authority

This potential shift would represent a direct challenge to the SEC’s authority, particularly since the SEC has historically been the primary regulator of most securities and related entities within the US financial markets. The SEC’s actions under Chairman Gary Gensler have been criticized by the crypto industry for being overly aggressive and hindering innovation. A Trump administration, however, is perceived as seeking a more crypto-friendly approach, potentially further widening the regulatory gap between the two agencies.

Table: Comparing CFTC and SEC Resources (FY 2024)

Agency	Budget (USD)	Employees
CFTC	$706 million	~700
SEC	$3 billion	~5,300

Beyond the potential CFTC takeover, the prospective Trump administration has signaled a broader crypto-friendly agenda. This includes the establishment of a White House crypto advisory council, the exploration of a national Bitcoin reserve, and the appointment of crypto-focused officials. Speculative reports even suggest individuals with pro-crypto viewpoints could fill key cabinet positions, including potential appointments like Scott Bessent (Treasury Secretary), Howard Lutnick (Commerce Secretary), and even Elon Musk (potentially in a role focused on governmental efficiency). These appointments would further solidify a more favorable regulatory climate for the cryptocurrency industry.

Conclusion: A Significant Shift with Uncertain Outcomes

The potential transfer of significant cryptocurrency regulatory authority from the SEC to the CFTC represents a monumental shift in the US regulatory landscape. While this move could foster innovation and attract crypto businesses to the US, the CFTC’s resource limitations pose significant challenges. Whether the CFTC can effectively regulate the massive crypto market remains a key question. The upcoming Trump administration’s approach will undeniably shape the future of cryptocurrency regulation in the United States.