Report: CFTC to Regulate Spot Market for Bitcoin and Ethereum Under Donald Trump

U.S. President-elect Donald Trump reportedly plans to expand the CFTC regulatory jurisdiction, giving the agency authority to regulate a huge portion of the crypto industry. FOX Business News, citing sources familiar with the matter, reported that the CFTC could regulate certain crypto assets, particularly those deemed commodities like Bitcoin (BTC) and Ethereum (ETH), under Trump’s administration.  CFTC to Regulate Bitcoin and Ethereum Spot Market  According to the report, this authority would also enable the CFTC to regulate the exchanges where investors trade these crypto assets. Per FOX Business, the move is part of efforts by the forthcoming Trump administration and the Republican majority in Congress to drastically reduce the SEC's regulatory power over the crypto industry.  Under the current administration, the SEC considered itself the appropriate regulator for crypto, pursuing stringent enforcement actions against crypto businesses. However, prominent players within Trump’s camp oppose this approach, advocating for friendly rules to drive innovation within the space.  The CFTC oversees the derivatives market, including trading of options, futures, and other physical commodities like oil. It also has Congress' backing to establish market rules and prosecute violators. Under Trump's administration, its responsibility could be expanded, allowing it to regulate crypto assets deemed commodities.  Despite the SEC’s attempt to label ETH a security, the CFTC maintains that Bitcoin and Ethereum are commodities. These two crypto assets account for over 70% of the $3.22 trillion valuation of the crypto market.  With Trump’s administration planning to give the CFTC authority over Bitcoin and Ethereum spot markets, the federal agency will regulate not only the assets but also the exchanges where they are traded.  This would provide regulatory clarity for Bitcoin and Ethereum, making the CFTC the main regulator for the spot market transactions of these assets. Currently, Congress has not given any federal agency such authority.  Factors Hindering CFTC Crypto Regulation  Former CFTC Chair Chris Giancarlo believes the agency could commence this regulation immediately after Trump's inauguration if it obtains the necessary funding. Giancarlo has been trying to convince Congress to give the CFTC spot authority over crypto. This saw him write a letter to the Senate Agriculture Committee in 2022, making a similar demand.  For Giancarlo, the CFTC faces significant challenges in regulating the crypto industry, ranging from lack of funding to understaffing.  For context, while the CFTC’s 2024 operating budget is $400 million, the SEC operates with a budget of $2.4 billion. The CFTC has a staff strength of around 700 compared to the 5,300 employees working at the SEC.  Expanding the CFTC jurisdiction to include spot market regulation for Bitcoin and Ethereum could increase the agency’s budget and staffing.