Trump admin eyes CFTC to lead digital asset regulation

The incoming Trump administration wants to expand the power of the Commodity Futures Trading Commission by granting it oversight of a significant portion of the $3 trillion digital asset market, FOX Business has learned.

The move would come as part of a broader effort by President-elect Donald Trump and the Republican majorities in Congress to roll back some of the regulatory power the Securities and Exchange Commission has wielded over the digital asset industry under President Biden and his outgoing SEC chairman, Gary Gensler.

The CFTC, often referred to as the “little sister” of the SEC, is mandated by Congress to oversee the $20 trillion U.S. derivatives market, which includes the trading of futures, options, plus physical commodities like gold, oil and wheat. Like the SEC, the CFTC has the power to establish market rules and bring enforcement cases, but it’s often perceived as having a lighter regulatory touch than the SEC because the derivative markets are dominated by sophisticated institutional players as opposed to small investors and therefore considered to be better equipped at managing risk.

With Trump taking office and the growing influence of the crypto industry in Republican politics, the CFTC’s role could soon expand to include the regulation of spot markets for digital assets deemed commodities — such as bitcoin and ethereum — along with the exchanges that facilitate their trading, according to sources with direct knowledge of the Trump team’s thinking. More than 50 million people hold digital assets, but key players in the incoming Trump administration believe that less stringent regulation is needed to spur innovation in the crypto business, including the potentially transformative blockchain technology that eliminates costly middlemen in business transactions.

“With adequate funding and under the right leadership, I think the CFTC could hit the ground running to begin regulating digital commodities on day one of Donald Trump’s presidency,” former CFTC Chairman Chris Giancarlo told FOX Business.

Giving the CFTC regulatory authority over the spot market for bitcoin and ethereum (which make up as much as 70% of the global crypto market) and possibly other tokens deemed digital commodities, would also give it the power to regulate the exchanges those assets are traded on. The move, if implemented, would mark a significant step toward providing regulatory clarity for companies and individuals involved in the trading of the two biggest cryptos by market cap, as no regulatory body currently has clear jurisdiction over those spot market transactions.