The US Commodity Futures Trading Commission (CFTC) announced that it is moving away from its previous practice of "regulation by enforcement," a method particularly noted during the Trump administration’s oversight of crypto firms.
The CFTC’s acting chair, Caroline Pham, detailed that the agency’s Division of Enforcement will now prioritize fraud, with the intent to cease the regulatory approach that targeted "good citizens."
The commission is set to establish two dedicated task forces. These groups will concentrate on retail fraud and breaches of the Commodity Exchange Act, as well as complex fraud and manipulation.
Acting enforcement director Brian Young emphasized that the reorganization aims to "enhance our vigorous and energetic enforcement program," allowing the staff to apply their expertise more effectively to cases that "secure justice for victims and uphold public confidence in the integrity of our markets."
This pivot in enforcement strategy marks one of Pham’s initial moves since assuming the position of acting chair on January 20, after Rostin Behnam stepped down. As of the announcement date, the nominee to fill Behnam’s vacancy had not been disclosed, with President Donald Trump expected to make a nomination before February 7.
In related regulatory news, the CFTC reported a substantial sum of over $17 billion in monetary relief for fiscal year 2024, predominantly stemming from actions against the now-defunct crypto exchange FTX. The commission has also pursued enforcement actions against other major figures and entities in the crypto space, including Binance and its CEO, Changpeng Zhao, as well as the former CEOs of Voyager and Celsius, Stephen Ehrlich and Alex Mashinsky, respectively.
Meanwhile, the Securities and Exchange Commission (SEC), another key financial regulator in the US, has also been making changes under the Trump administration. On January 21, the SEC announced the formation of a crypto task force to develop a regulatory framework for digital assets, with acting chair SEC Commissioner Mark Uyeda at the helm. The confirmation of Paul Atkins, Trump’s nominee to succeed former Chair Gary Gensler, is pending a US Senate decision.
In a move to further engage with market participants and industry stakeholders, Pham announced on January 27 that the commission would organize public roundtable discussions, which may include dialogues on digital assets. Additionally, there have been reports of the CFTC investigating Super Bowl-related bets offered by Crypto.com and the betting platform Kalshi, with the championship game scheduled for February 9.
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