Trump Shifts Crypto Regulation to CFTC, Reduces SEC Role

Trump administration seeks to shift crypto regulation to CFTC, diminishing the SEC’s influence over digital assets.

The change has the potential to transform the US crypto regulatory environment, giving better clarity for institutional investors and enterprises. While perhaps decreasing friction created by overlapping jurisdictions.

The new Trump administration is apparently exploring a substantial revamp of cryptocurrency regulation in the United States. With the goal of delegating considerable jurisdiction from the Securities. And Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC). This anticipated adjustment would represent a significant divergence from the SEC’s previous strong position on digital assets.

According to Fox Business, the Trump administration intends to empower the CFTC to control cryptocurrency exchanges and spot markets for digital assets considered commodities, including Bitcoin and Ether. Outgoing SEC Chair Gary Gensler has long urged for Bitcoin to be classified as a commodity, which this action supports.

Gensler, noted for his strict stance to cryptocurrency, announced his retirement on January 20, 2025, coinciding with President-elect Trump’s inauguration. Gensler’s retirement marks the conclusion of a difficult period for cryptocurrency at the SEC. Throughout his term, he focused on setting regulatory limits for digital assets and took various enforcement actions. While his effort for greater monitoring earned plaudits from consumer activists, it was met with strong opposition from business executives and lawmakers who advocated for a more balanced approach.

CFTC as the New Crypto Regulator?

The proposed regulation change would give the CFTC more jurisdiction over the crypto sector, perhaps establishing it as the principal regulator for some forms of digital assets. This development would reduce the SEC’s power, which has been chastised for its enforcement-heavy approach under Gensler’s leadership.

Recent moves have reinforced the CFTC’s stance on cryptocurrencies. In March 2024, the government classified Ether as a commodity in a case against KuCoin. If the Trump administration follows through, this designation might strengthen the CFTC’s role in regulating big cryptocurrencies and associated markets, while its more specialized approach to commodities would stimulate innovation and attract investment, particularly in assets such as Bitcoin and Ether.

Trump’s Pro-Crypto Agenda

President-elect Trump’s administration has taken a more pro-crypto position, with plans geared at accelerating the industry’s growth and incorporation into established financial institutions.

This agenda includes a Federal Bitcoin Reserve, a crypto-specific White House job, and simpler rules for digital assets.

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