Donald Trump's return to the office will herald a new era in US crypto policy, as seen in the talks of granting full crypto oversight to the Commodity Futures Trading Commission (CFTC) which is likely to erode some of SEC’s power.
Former CFTC Chairman Chris Giancarlo told Fox Business that “adequate funding” and the right leadership can make CFTC “hit the ground running to begin regulating digital commodities on day one of Donald Trump’s presidency”.
So far it hasn't been officially confirmed yet but CFTC is likely to get oversight on spot markers for digital assets which means the regulation for Bitcoin and Ethereum ETFs will be under its purview along with the crypto exchanges offering them.
CFTC already oversees Ethereum and Bitcoin futures and options.
But these crypto exchanges are also known to offer other digital assets. Although none of these are considered as securities yet the SEC takes action against them, saying that they are unregistered securities.
The SEC has also taken action against crypto exchanges like Binance and Coinbase and forms like Kraken for offering digital assets which the regulator considers unregistered securities.
The securities industry in the US is usually overseen by the SEC with the CFTC acting as a sister organisation which regulates the derivatives and commodities markets.
SEC has a much larger budget and resources at its disposal than CFTC. In the 2024 fiscal year, the SEC had a budget of $3 billion while the CFTC only received $706 million in funding. Moreover, the former has 5300 staff members compared to the 700 of the latter.
Both of them often clash in their jurisdiction over the $3 trillion crypto market. Hence, granting CFTC crypto oversight will enhance regulatory clarity for the industry.
The crypto market is also upbeat about this as the CFTC is more pro-crypto than SEC. Earlier in 2017, the commodities regulator approved Bitcoin futures trading. Compared to that the SEC was able to approve spot Bitcoin ETFs in 2024.
This comes at a time when the current SEC Chairman Gary Gensler has announced that he is not returning to office under the Trump administration. Gensler took a fierce anti-crypto stance in recent times. However, the Trump administration hasn't disclosed his replacement as of yet.
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.
This marks a major step towards regulatory clarity for individuals and companies involved in the two biggest cryptos as per market cap. This is because no regulatory entity has a clear mandate over spot market transactions.