The incoming administration of U.S. President-elect Donald Trump is contemplating transferring the responsibility of regulating the cryptocurrency industry to the Commodity Futures Trading Commission (CFTC). This potential shift comes after the Securities and Exchange Commission (SEC) faced criticism for its handling of crypto regulations in recent years.
According to a report by Fox Business on November 26, Trump and the Republican majority are considering reallocating regulatory authority from the SEC to the CFTC. If approved by Congress, this move would give the CFTC a central role in overseeing digital assets and crypto-related products like Bitcoin and Ethereum spot ETFs. It would also enable the commission to supervise options markets that have recently introduced crypto products.
The President-elect is aiming to foster innovation in the digital asset space, which could lead to a more favorable environment for the industry. Despite the rapid growth of cryptocurrencies, they are still considered a relatively new financial market. By entrusting the regulation of this sector to the CFTC, Trump hopes to create a more conducive framework for its development.
The SEC, under President-elect Joe Biden’s administration, has faced backlash from the crypto community for its stringent enforcement actions and regulatory approach. In the past year alone, the commission has filed charges against crypto entities around 46 times, marking a 53% increase from the previous year. This surge in enforcement actions represents the highest number of lawsuits since the SEC began overseeing the crypto market back in 2013.
Major crypto exchanges such as Binance and Coinbase have been prime targets for SEC lawsuits, with allegations ranging from operating unregistered exchanges to violating securities laws. Even Changpeng Zhao (CZ), the founder of Binance, has been embroiled in legal battles with the SEC. Coinbase, under the leadership of SEC Chairman Gary Gensler, is also facing scrutiny for allegedly running an unregistered exchange.
With over 50 million traders and a market size exceeding $3 trillion, the cryptocurrency industry is rapidly expanding. By entrusting the regulation of this burgeoning market to the CFTC, the government aims to ensure that crypto exchanges, companies, and individuals operate within specific guidelines and safeguards. This move could potentially bring more stability and legitimacy to the crypto space, fostering its continued growth and adoption.
