President-elect Donald Trump’s administration reportedly plans to expand the Commodity Futures Trading Commission’s (CFTC) role by giving it oversight of the digital asset market.
FOX Business reported Tuesday that Trump and the Republican-led Congress plan to limit the SEC’s control over the digital asset industry. This move aims to reverse the regulatory approach taken during President Biden’s term under outgoing SEC Chairman Gary Gensler.
Futures and options trading on commodity exchanges, including agriculture, energy, metals, financial instruments, and indices, falls under the CFTC’s oversight. Its regulatory scope expanded significantly after the 2010 Dodd-Frank Act, which brought over-the-counter derivatives, known as swaps, under its authority. These swaps involve exchanging cash flow streams linked to specific indices or assets.
Rather than focusing on retail investor protection like the SEC, the CFTC prioritizes safeguarding market participants through a robust regulatory framework. It ensures proper registration and compliance from intermediaries such as futures commission merchants.
With Unclear US Crypto Rules, CFTC Stands Out as Key Player in Regulatory Framework
Cryptocurrencies like Bitcoin are classified as commodities, not securities, under the CFTC’s jurisdiction. This classification was solidified in the 2018 CFTC v. McDonnell case, where a court officially recognized Bitcoin as a commodity.
Appointing the CFTC as the primary crypto regulator would mark significant progress in providing regulatory clarity for entities trading top cryptocurrencies by market capitalization — an area currently lacking clear oversight for spot market dealings.
In the US, digital asset regulation remains unclear, with the SEC and CFTC relying more on enforcement actions than on setting definitive guidelines.
Chris Giancarlo, Trump’s Pick for Crypto Czar, Highlights CFTC’s Regulatory Potential
FOX reported that key figures in Trump’s incoming administration believe lighter regulations will boost innovation in the crypto sector. They aim to promote blockchain development, which could transform business transactions by eliminating costly intermediaries.
Former CFTC Chairman Chris Giancarlo told FOX Business that, with adequate funding and strong leadership, the CFTC could begin regulating digital commodities on day one of Trump’s presidency.
Giancarlo, who chaired the CFTC during Donald Trump’s first term, is now a candidate for the administration’s “crypto czar” role. This position, though not fully defined, would oversee crypto policies and potentially lead an industry advisory council.
Known as “Crypto Dad” for promoting blockchain innovation, Giancarlo has been a strong advocate for modernizing financial systems.
He previously led the Digital Dollar Project, exploring the potential for a US central bank digital currency. Recent reports suggest he has stepped away from consideration for top roles at the CFTC and SEC, signaling his interest in the proposed crypto czar position.
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