Trump’s Support for Crypto Likely to Strengthen CFTC’s Authority in the Industry

The US Commodity Futures Trading Commission (CFTC), a typically underfunded regulatory body often eclipsed by the SEC, stands to gain prominence if the upcoming Trump administration revises crypto regulation and appoints a chair sympathetic to the industry.

Many of the names currently mentioned as potential successors to Rostin Behnam for the head position at the derivatives regulator are expected to be supportive of the approximately $3 trillion cryptocurrency sector. Republican commissioners Summer Mersinger and Caroline Pham are among those considered, as per sources familiar with the discussions. Additional names in contention include Joshua Sterling, Jill Sommers, and Neal Kumar, all former CFTC officials who have collaborated with digital asset companies, the sources indicated.

The next chair is positioned to carve a new direction for an agency that is considerably smaller and seen as less influential than the SEC, which has enforced a stringent stance against cryptocurrency companies. With Republicans in charge of Congress and the White House, the agency’s jurisdiction may significantly broaden to include major cryptocurrencies like Bitcoin and Ether.

“The agency’s profile will rise dramatically simply because crypto and all technological advancements will receive heightened attention under this administration,” stated Kari Larsen, a partner at Willkie Farr & Gallagher.

Kumar, Mersinger, Pham, Sommers, and Sterling declined to provide comments. Behnam, who took his oath as CFTC chair in 2022, has yet to resign.

Trump’s transition team has not commented on specific plans regarding the CFTC chair.

“President-elect Trump has been making brilliant decisions regarding appointments for his second administration at a remarkable pace,” remarked Karoline Leavitt, the transition spokeswoman. “Additional decisions will be disclosed by him as they are finalized.”

The cryptocurrency sector, alongside traditional players in the derivatives market, such as banks, brokers, and futures exchanges, count on Mersinger as a strong advocate. She has openly criticized the agency’s enforcement actions against cryptocurrency companies, particularly those concentrated on decentralized finance (DeFi), highlighting the lack of clear regulations to assist them in compliance.

Mersinger has pointed out that the CFTC has frequently imposed temporary fines and enforcement actions without engaging with companies to create rules that promote long-term compliance.

“Using enforcement measures against DeFi protocols instead of providing clarity through notice-and-comment rulemaking risks pushing responsible DeFi developers abroad, thus shifting businesses, jobs, and economic activity out of the United States,” she expressed in a September statement following a CFTC settlement with Uniswap Labs. This approach consequently leaves behind “the bad actors and criminals who are merely interested in exploiting American citizens.”

Mersinger enjoys substantial support on Capitol Hill, including from John Thune, the senator from her home state of South Dakota, who has recently been elected by his peers to serve as majority leader. She was Thune’s senior aide from 2004 to 2016 and directed the CFTC’s legislative affairs team during Trump’s first term.

Enforcement Critic

Pham, a former managing director at Citigroup Inc., is another candidate for the CFTC chair. She is also an advocate for financial innovation and a staunch critic of the agency’s enforcement actions. As a commissioner, Pham has established her role as an expert in market-structure policy. She chairs the agency’s Global Markets Advisory Committee, which has focused on methods to regulate digital asset technologies and markets.

Pham has been in favor of concepts like regulatory “sandboxes,” which serve as safe testing environments for both corporations and agencies. For instance, cryptocurrency firms could trial innovations within a specific timeframe without the fear of enforcement, allowing the CFTC to fine-tune its regulatory strategies.

A third candidate is Sterling, an attorney at Milbank who previously led the CFTC’s Market Participants Division during Trump’s first term. The Republican has advocated for the futures exchange Kalshi in its dispute with regulators over its capacity to offer betting on elections.

Another possible choice is Kumar, a derivatives partner at Willkie’s corporate and financial services group who has substantial experience in digital asset concerns in addition to traditional futures and swaps. He served as special counsel at the CFTC from 2009 to 2012, although his party affiliation is unknown.

Sommers, a former Republican CFTC commissioner, played a role in the five-member board during the turbulence of the 2008 financial crisis and the rollout of the 2010 Dodd-Frank Act. She was a chief lobbyist at the Chicago Mercantile Exchange and is currently the chair of the derivatives practice group at Patomak Global Partners, a consultancy focused on the financial services sector.

Sommers also previously served on the board of LedgerX, a CFTC-regulated futures exchange and clearinghouse that was owned by FTX, a cryptocurrency exchange that collapsed in 2022. LedgerX remained one of the few sectors of the company that remained solvent and was subsequently acquired by Miami International Holdings.

Rising Profile

The CFTC has a longstanding role in overseeing the derivatives market, which is crucial for determining prices across a wide range of commodities, from coffee to crude oil. Its authority grew in response to the financial crisis, which highlighted the risks posed by complex financial swaps that contributed to the economic downturn.

With the potential expansion of its powers under President-elect Donald Trump, the CFTC could become the primary regulator for Bitcoin and other digital assets that are not classified as securities, should Congress designate it as such.

It remains uncertain whether new authority will come with an increase in funding. The CFTC’s budget has remained stagnant for years, while the SEC boasts roughly seven times as many employees and has requested a fiscal 2025 budget of $2.6 billion, about seven times greater than that of the CFTC.

Trump, along with advisers Elon Musk and Vivek Ramaswamy, has vowed to reduce the size of the federal workforce and cut back on regulations.

Unlike the SEC, the CFTC has generally enjoyed a more favorable perception from both political parties. However, the broader cost-cutting initiatives pose a wildcard for the CFTC’s prospects in the cryptocurrency space, according to Gary DeWaal, a former senior counsel and derivatives market expert at law firm Katten Muchin Rosenman.

“The CFTC is probably already operating with insufficient staff and funding, and they’ll be tasked with a new, additional regulatory responsibility,” DeWaal said. “The real question is how they will manage it.”

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