The incoming Trump administration is planning a significant shift in digital asset regulation by proposing an expanded role for the Commodity Futures Trading Commission (CFTC). 

According to FOX News, sources familiar with the matter indicate the administration aims to grant the CFTC oversight of the spot market for digital commodities such as Bitcoin and Ethereum, which together comprise approximately 70% of the global cryptocurrency market.

Currently, the report states CFTC oversees the $20 trillion US. derivatives market, including futures, options, and physical commodities, but does not have jurisdiction over cryptocurrency spot markets. 

Under the proposal, the CFTC would gain authority over these markets and the exchanges facilitating trades, marking a departure from the regulatory dominance of the Securities and Exchange Commission (SEC) in the digital asset space.

The The proposal comes amid criticism of the SEC’s approach under outgoing Chairman Gary Gensler, who pursued aggressive enforcement actions against the cryptocurrency industry. 

By contrast, the CFTC is perceived as having a lighter regulatory touch, which proponents argue could foster innovation in blockchain technology and the broader digital asset ecosystem.

Former CFTC Chairman Christopher Giancarlo, known for his advocacy of the agency's involvement in crypto regulation, is being considered for a potential advisory role in the new administration. 

Giancarlo has long supported granting the CFTC spot market authority, citing its early recognition of Bitcoin as a commodity in 2015 and its approval of Bitcoin futures trading during his tenure.

The expanded role would require additional funding and staffing for the CFTC, which operates with a significantly smaller budget and workforce compared to the SEC. The agency's $400 million budget and 700 employees in 2024 contrast sharply with the SEC's $2.4 billion budget and 5,300 staff members.

The initiative has drawn mixed reactions. While the cryptocurrency industry largely supports the move, concerns have emerged from traditional CFTC constituencies about potential overreach into other markets, such as physical and agricultural commodities. Addressing these concerns would require clear legislative language to delineate the CFTC’s jurisdiction.