Trump Administration Mulling Giving CFTC Reins To Crypto Regulation

by

As a seasoned researcher who has closely followed the evolution of cryptocurrencies and their regulatory landscape, I find the potential shift of digital asset regulation to the Commodity Futures Trading Commission (CFTC) an intriguing development. The industry’s preference for the CFTC, due to its perceived lenient approach to crypto, is not new to me.

The new administration led by Donald Trump is considering transferring the supervision of cryptocurrency exchange platforms and direct marketplaces for commoditized digital currencies to the Commodity Futures Trading Commission (CFTC).

The action could extend the jurisdiction of the CFTC over a substantial portion of the $3 trillion cryptocurrency market, thereby increasing its influence.

CFTC To Lead Digital Asset Regulation? 

Reducing the influence of the U.S. Securities and Exchange Commission (SEC) could be substantial. Under Gary Gensler’s leadership, the SEC took robust regulatory actions against cryptocurrency companies. The incoming administration of President-elect Donald Trump thinks that these enforcement actions have hindered innovation in the crypto sector within the U.S. They propose a more lenient approach to encourage innovation and foster growth in this area.

Breaking News: The Trump administration is considering giving oversight responsibility for digital assets to the Commodity Futures Trading Commission (CFTC), according to reports from FOX.

Should the Commodity Futures Trading Commission (CFTC) gain regulatory oversight of cryptocurrencies, it would be a substantial victory for the U.S. crypto industry. The CFTC is seen as the preferred regulatory body due to its perceived more flexible stance towards cryptocurrencies. Chris Giancarlo, former Chairman of the CFTC, expressed this viewpoint.

Given proper finances and suitable management, I believe the Commodity Futures Trading Commission (CFTC) would be well-prepared to start overseeing digital commodities immediately upon Donald Trump’s inauguration.

Previously, the head of the Commodity Futures Trading Commission (CFTC) had made an effort to persuade the Senate Agriculture Committee, responsible for overseeing the CFTC, to endorse its jurisdiction over the direct crypto market. This was done by reminding them of the CFTC’s initial involvement with Bitcoin (BTC), which it classified as a commodity back in 2015.

A Perceived Lighter Touch 

The Commodity Futures Trading Commission (CFTC) regulates the 20 trillion USD derivatives market in the U.S., encompassing transactions involving futures, options, and tangible goods like gold, silver, oil, and wheat. It sets market guidelines and takes action against organizations that violate these rules and regulations. Compared to the SEC, it is seen as having a more lenient approach. This is primarily due to derivatives markets being heavily influenced by large institutions which are generally considered more capable of handling risk.

Instead of directly enforcing actions on cryptocurrency, Rostin Behnam, the head of the Commodity Futures Trading Commission (CFTC), has instead requested additional funding from the Senate Agriculture Committee to enhance regulation of the crypto market more efficiently. Notably, the CFTC’s budget for the 2024 fiscal year is $706 million, which is significantly smaller than the Securities and Exchange Commission’s (SEC) $3 billion budget for the same period. Moreover, the CFTC has a much smaller workforce, with only 700 employees compared to the SEC’s 5,300.

Approximately half of the Commodity Futures Trading Commission’s (CFTC) enforcement actions target well-known cryptocurrency companies and businesses, a surprising figure given that this agency is not primarily responsible for overseeing the industry. The chair of the SEC, Behnam, has referred to this statistic as alarming. To effectively combat fraud and market manipulation in the spot crypto market, the CFTC needs increased funding.

The lack of clear definition for digital assets and reluctance by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to establish clear guidelines has resulted in these bodies enforcing regulations in the cryptocurrency market via their enforcement actions.

Read More

2024-11-27 18:00