Crypto exchange Coinbase is urging U.S. lawmakers to grant the Commodity Futures Trading Commission (CFTC) full regulatory authority over spot cryptocurrency markets. This shift could significantly limit the Securities and Exchange Commission’s (SEC) influence in the digital asset sector.
Faryar Shirzad, Coinbase’s chief policy officer, outlined this stance in a two-page proposal to Congress, emphasizing the need for clear regulations and consumer protections in the crypto space.
Legislative Priorities for Crypto Regulation
Shirzad’s proposal highlights six legislative priorities, with a key focus on giving the CFTC comprehensive oversight of the crypto spot market. According to Shirzad, “Digital assets like Bitcoin and Ethereum are commodities, not securities. Legislation must empower the Commodity Futures Trading Commission (CFTC) to oversee the crypto spot market, ensuring transparency and protecting consumers from fraud and manipulation.”
Although this shift would reduce the SEC’s regulatory reach over digital assets, Shirzad acknowledged the agency’s ongoing role. He suggested that Congress should “create SEC rules for capital raising,” allowing blockchain developers to raise funds without having every token classified as a security.
Growing Support for CFTC Oversight
The proposal aligns with the crypto industry’s general preference for CFTC oversight. Several Republican lawmakers also back this approach. In 2022, Representatives Glen Thompson and Tom Emmer reintroduced the Digital Commodity Exchange Act, aiming to authorize the CFTC to regulate the digital asset market.
Former CFTC Chair Chris Giancarlo also advocated for the agency’s control over spot crypto markets, urging the Senate Agriculture Committee to support the initiative. Notably, former President Donald Trump was reportedly considering transferring oversight of the sector to the CFTC.
Current Regulatory Landscape and SEC’s Position
Currently, the SEC regulates spot crypto markets, except for Bitcoin and Ether, which it has deemed non-securities. However, the SEC’s stance on other cryptocurrencies remains ambiguous.
In early 2023, former SEC Chair Gary Gensler argued that all cryptocurrencies besides Bitcoin are securities, as they involve a centralized entity with profit expectations from investors. Gensler even considered labeling Ether as a security but dropped the investigation in mid-2024.
Despite this, the SEC has taken a more lenient approach to crypto regulation under President Trump’s administration. In February, the agency’s newly formed Crypto Task Force met with industry stakeholders to clarify rules on broker-dealing and staking.
If Coinbase’s proposal gains traction, it could reshape the regulatory landscape for digital assets in the U.S., granting the CFTC greater authority while narrowing the SEC’s jurisdiction. This shift may bring more clarity and stability to the crypto market, influencing investor confidence and industry growth.
