Trump Administration Plans to Empower CFTC as Lead Crypto Regulator, Curtailing SEC’s Role

Brad. M

11/27/20242 min read

The Trump administration is poised to make a significant regulatory pivot in the cryptocurrency sector by shifting authority from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC). This move aims to simplify oversight, reduce friction caused by overlapping jurisdictions, and provide a clearer framework for institutional investors and businesses.

CFTC as the Primary Crypto Regulator

Reports from Fox Business suggest that the Trump team is preparing to empower the CFTC to regulate cryptocurrency exchanges and oversee spot markets for digital assets classified as commodities, such as Bitcoin and Ether. This aligns with outgoing SEC Chair Gary Gensler's view of Bitcoin as a commodity, a stance he has publicly advocated.

The proposed change would diminish the SEC’s influence over the crypto space. The SEC, under Gensler’s tenure, adopted a stringent enforcement-first approach, often criticized for stifling innovation while leaving regulatory ambiguities unresolved.

Gary Gensler’s Resignation Marks a Turning Point

Gary Gensler recently announced his resignation as SEC Chair, effective January 20, 2025—the same day President-elect Trump assumes office. Gensler’s tenure was marked by high-profile enforcement actions and efforts to define digital assets’ regulatory landscape. While consumer advocates praised his push for accountability, crypto industry leaders and pro-business policymakers often viewed his approach as overly aggressive and detrimental to innovation.

Gensler’s departure paves the way for a potential overhaul of the U.S. crypto regulatory framework, signaling the end of an era defined by the SEC's dominant role in overseeing the sector.

Trump’s Pro-Crypto Agenda

The Trump administration's plans to elevate the CFTC's role align with its broader pro-business, pro-crypto agenda. The CFTC has already demonstrated its capability to regulate certain aspects of the crypto market. For instance, in March 2024, the agency classified Ether as a commodity in a lawsuit against KuCoin, reinforcing its readiness to oversee major cryptocurrencies.

By granting the CFTC greater regulatory authority, the Trump administration seeks to create a more accommodating environment for crypto innovation. A streamlined regulatory approach could encourage investment, particularly in assets like Bitcoin and Ether, which are poised to benefit from the CFTC’s commodity-focused framework.

Implications for the Crypto Industry

If implemented, this regulatory realignment could:

  • Boost market confidence by reducing regulatory ambiguity.

  • Attract innovation and investment through a more balanced oversight model.

  • Curtail enforcement-driven regulatory uncertainty, allowing businesses to operate with greater clarity.

As the U.S. crypto industry approaches this potential transformation, stakeholders are closely monitoring the situation. If the Trump administration follows through with this plan, it could reshape the future of digital asset regulation, creating a more dynamic and investor-friendly environment. The coming months will be crucial in determining the trajectory of U.S. crypto policy and the industry's evolution.