CFTC May Regulate Crypto Markets Under Trump Administration
President-elect Donald Trump’s administration is reportedly planning to award the commodity futures The Commission on Trading (CFTC) has expanded its regulation of the cryptocurrency market.
The move aims to reduce the regulatory influence of the U.S. Securities and Exchange Commission (SEC), potentially positioning the CFTC as the primary regulator of Bitcoin (BTC) and Ethereum (ETH).
CFTC as preferred cryptocurrency regulator
According to Fox Business, the Trump administration seeks to redefine regulatory responsibilities. Specifically, giving the CFTC jurisdiction over the spot market Bitcoin and Ethereum. These two assets alone are worth approximately $2.24 trillion, accounting for 70% of the global cryptocurrency market.
By designating them as commodities, the CFTC’s light-touch regulations, which have traditionally applied to derivatives and commodities markets, may appeal to industry stakeholders seeking to reduce barriers to innovation.
Christopher Giancarlo, former chairman of the U.S. Commodity Futures Trading Commission (CFTC), is widely regarded as “crypto daddy,” expressing support for the agency’s expanded role.
“With enough funding and the right leadership, the Commodity Futures Trading Commission could begin regulating digital commodities on day one of Donald Trump’s presidency,” Fox Business said. reportquoting Giancarlo.
The proposal aligns with Republican priorities of promoting innovation and reducing regulatory barriers. It also reflects dissatisfaction with the SEC’s enforcement-driven approach under the outgoing chairman Gary GenslerDuring his tenure, there was a severe crackdown on cryptocurrency companies.
Resolving regulatory uncertainty
The SEC and CFTC have long argued over the classification of digital assets, resulting in fragmented and often conflicting regulations. While the SEC considers most cryptocurrencies to be securities, the CFTC considers Bitcoin and Ethereum to be commodities. This inconsistency creates a regulatory gray area that stifles growth and drives cryptocurrency businesses to more permissive jurisdictions.
If implemented, the plan could also ease disputes between agencies. CFTC Chairman Rostin Behnam previously stated Ethereum jurisdiction. The agency has shown interest in becoming more broadly involved in the regulation of digital assets, citing its trading in futures contracts.
As the Trump administration pushes to empower the CFTC, a newly proposed bipartisan initiative — the BRIDGE Digital Asset Act — aims to create a Cooperation Framework between SEC and CFTC. Sponsored by Tennessee Congressman John Rose, the legislation introduces a joint advisory committee composed of 20 private sector representatives.
“The current heavy-handed approach to enforcement and regulation is not working and instead encourages investment in this critical innovation overseas,” the bill says. state.
By fostering collaboration, the Commission aims to harmonize regulatory policy and provide a clear path for industry and government partnerships. This collaborative approach can resolve past conflicts between agencies.
For example, the U.S. Securities and Exchange Commission (SEC) 2023 statement stated that all Proof of Stake (PoS) Tokens are securities that conflict with securities CFTC Treats Ethereum as a Commodity. A unified framework would clarify jurisdiction and provide much-needed guidance to cryptocurrency companies and investors.
Cryptocurrency community largely welcomes CFTC-led idea Regulationbelieving the agency is more inclusive than the SEC.
“The SEC will no longer be able to strangle the cryptocurrency market…its (CFTC) activities are subject to more moderate regulation as the derivatives market is dominated by mature institutional players who are better equipped to manage risk,” one user commented.
However, concerns remain about the CFTC’s ability to handle expanded responsibilities. The CFTC has an annual budget of $400 million and a staff of 700, which is far lower than the SEC’s $2.4 billion budget and 5,300 employees, so it requires a lot of money and resources to effectively regulate the cryptocurrency spot market.
Additionally, some traditional supporters of the CFTC, such as agricultural commodities traders, have expressed concerns about potential spillovers from the agency’s participation in digital markets. Legislative language that addresses these issues is critical to gaining bipartisan support.
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