According to the
Fox Business report, the incoming Trump administration hopes to expand the powers of the Commodity Futures Trading Commission (CFTC) and authorize it to regulate the $3 trillion digital asset market.
What are the jurisdictions of CFTC and SEC?
The Commodity Futures Trading Commission (CFTC) is an independent federal agency authorized by Congress to regulate the approximately $20 trillion U.S. derivatives market, including futures, options, and the trading of physical commodities such as gold, oil, and wheat. The CFTC's mission is to protect market participants and the public from fraud, manipulation, and abusive practices, and to promote open, competitive, and financially sound futures and options markets.
In the regulation of cryptocurrencies in the U.S., there is often a gray area between the jurisdictions of the SEC and CFTC. For example, the
CFTC chairman has stated that BITCOIN and ETH are commodities and should fall under CFTC's purview, while the SEC has argued that cryptocurrencies with security-like features are under SEC's jurisdiction, and most tokens other than BITCOIN fall into the securities category.
Due to the uncertainty around the classification of digital assets and the reluctance of both the SEC and CFTC to establish clear rules, these two agencies have been regulating the space through enforcement actions. Under the leadership of Gensler, the SEC has led a three-year industry-wide crackdown to reinforce its view that most cryptocurrencies other than BITCOIN are securities, making it largely unpopular with the U.S. crypto industry, which generally favors the CFTC as the primary regulator.
Will the jurisdiction of digital assets go to CFTC?
Former CFTC Chairman Chris Giancarlo told Fox Business:
With adequate funding and the right leadership, I believe the CFTC could begin regulating digital commodities on the first day of a Trump presidency.
Granting the CFTC the authority to regulate the spot markets for BITCOIN and ETH (which together account for 70% of the global crypto market) as well as potentially other tokens viewed as digital commodities would also empower it to oversee the exchanges trading these assets. If implemented, this would mark an important step in providing regulatory clarity for companies and individuals participating in the trading of the two largest cryptocurrencies, as there is currently no clear regulatory authority over these spot markets.
Could Chris Giancarlo become the "Crypto Czar"?
The 65-year-old Giancarlo served as CFTC Chairman during Trump's first term in office. He has long advocated for a greater role for his CFTC in the regulation of digital currencies. Under Giancarlo's leadership, the CFTC approved the first BITCOIN futures trading product in the U.S.
He has been a key member of the incoming Trump transition team, which has promised a more crypto-friendly regulatory environment to foster the use of digital assets and the potentially revolutionary blockchain technology.
The Trump team is considering creating a new White House position specifically focused on cryptocurrency policy, and Giancarlo, with his Washington D.C. credentials and deep understanding of policy implementation, is currently a likely candidate for what the market has dubbed the "Crypto Czar" role.
(
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