The incoming Trump administration is proposing a significant shift in the regulation of digital assets by granting expanded oversight to the Commodity Futures Trading Commission (CFTC). This plan would reduce the Securities and Exchange Commission’s (SEC) power over the digital assets market. The announcement comes as Gary Gensler, the outgoing SEC chairman, prepares to step down on January 20, 2025.

According to a report by Fox Business, the proposed change would empower the CFTC to oversee spot markets for digital assets, including Bitcoin. Currently, no regulatory body has clear jurisdiction over these transactions. Former CFTC Chairman Chris Giancarlo, a strong advocate for the agency's expanded role, stated, “With adequate funding and under the right leadership, I think the CFTC could hit the ground running to begin regulating digital commodities on day one of Donald Trump’s presidency.”

This shift aligns with the administration's broader mission to streamline regulation and encourage innovation in the Bitcoin and crypto space. The CFTC, known for its lighter regulatory touch compared to the SEC, already oversees the $20 trillion U.S. derivatives market. If the proposal is enacted, the agency would also gain the authority to regulate exchanges trading digital assets deemed commodities, potentially creating a more unified regulatory framework for the industry.

The Trump administration’s plan aims to address criticisms of the SEC’s heavy-handed approach under Gensler, who has been widely criticized by the industry for enforcement-driven regulation. Approximately 50% of the CFTC’s enforcement actions this year targeted crypto businesses, despite the agency lacking a formal mandate to regulate the sector.

Key figures, including Giancarlo, are being considered for new roles within the administration, such as a “crypto czar” to oversee the implementation of policies. Giancarlo, who led the CFTC during Trump’s first term, has long supported the agency’s engagement with digital assets, noting its early classification of Bitcoin as a commodity in 2015 and the approval of Bitcoin futures trading under his leadership.

However, the plan to expand the CFTC’s authority has raised concerns among some traditional stakeholders. Critics fear the move could spill over into the regulation of physical and agricultural commodities, which are currently under the purview of other agencies, such as the Department of Agriculture. These concerns may necessitate specific legislative language to limit the CFTC's expanded role to digital commodities.

The proposal also underscores the resource disparity between the SEC and CFTC. The SEC’s 2024 operating budget was $2.4 billion compared to the CFTC’s $400 million, with the latter employing significantly fewer staff. Additional funding and resources would likely be needed for the CFTC to effectively manage its expanded responsibilities.

Fox Business Article