Note: Attorneys from WilmerHale will discuss these issues and others during our upcoming webinar “Crypto Currently: The First 30 Days of the Trump Administration” on March 3, 2025. CLE credit is available—register here.
The CFTC has seen a significant amount of activity since the inauguration of President Donald Trump on January 20. Chairman Rostin Behnam resigned as Chairman and as a Commissioner. Caroline Pham was elected Acting Chairman1 and immediately appointed new staff leadership. Former Commissioner Brian Quintenz has been nominated as the next Chairman. Staff roundtables have been announced, task forces have been created, Commission staff have been terminated, and the policy agenda has been reprioritized.
In the next few months, we expect to see Senate confirmation of Quintenz as CFTC Chairman and the introduction of new senior staff leadership. The new CFTC will start working on an ambitious agenda to reshape the cryptocurrency regulatory framework, event contract marketplaces, and to address the rapidly increasing retail participation in derivatives markets. Other important topics, such as the regulation of swap dealers and swap trading, conflicts of interest among affiliates, and cross-border regulatory comity are also on the table. Given these items, the CFTC is poised to make changes that could impact its markets for years to come.
As these significant changes continue to unfold, members of WilmerHale’s experienced Futures and Derivatives Practice are analyzing their implications for market participants throughout the industry.2 We welcome the opportunity to help you develop strategic approaches that align with your business goals while navigating this evolving landscape.
What to Expect from the CFTC in 2025
As discussed below, we expect the CFTC to play an important leadership role in the development of both domestic and international policy on a wide range of topics. Whether related to cryptocurrencies, single stock futures, over-the-counter derivatives, or artificial intelligence (“AI”), we anticipate the CFTC will coordinate with other U.S. agencies, particularly the Securities and Exchange Commission (“SEC”). The CFTC will also maintain a critical role with the Financial Stability Oversight Council, which often serves as the hub of government policy development in the financial services sector.
The CFTC’s ability to successfully craft and implement new policy in these important areas will depend, in part, on the actions taken on Capitol Hill. Any new oversight of spot cryptocurrency markets will likely require passage of significant legislation, whether in the form of the bipartisan, House-passed Financial Innovation and Technology for the 21st Century Act or one of the other leading proposals.3 Further, any expansion of the CFTC’s jurisdiction and mission will require adequate funding and resources. In the current resource-constrained environment, the CFTC could find itself directed by Congress to take on more than ever before with the same or less resources available.
It will take several months for Brian Quintenz to have his confirmation hearing before the Senate Agriculture Committee, a vote by the committee, and then confirmation by the Senate. Accordingly, we project Quintenz will assume his role as Chairman in the summer of 2025. For example, J. Christopher Giancarlo, who served as CFTC Chairman under Trump’s first term, was nominated in March 2017 and confirmed in August 2017.4 Former Chairman Behnam was not nominated until September 2021, and was confirmed in December 2021.5 Gary Gensler, during the financial crisis, was the last CFTC Chair nominated prior to inauguration, and he was confirmed in May 2009.6 Commissioner Christy Goldsmith-Romero, a Democratic Commissioner, has announced her intention to step down from the CFTC upon Quintenz’s confirmation, leaving the CFTC with one Democratic Commissioner.7
The CFTC will continue to forge ahead under the leadership of Acting Chairman Pham. As described below, she has moved quickly to establish her priorities and actively direct the CFTC in a new direction.
First 30 Days: Acting Chairman Caroline Pham
Acting Chairman Pham has served as a CFTC Commissioner since April 2022. In that role, Commissioner Pham has advocated for clearer cryptocurrency regulations and supported initiatives to enhance market liquidity. She has also expressed interest in establishing a regulatory framework for political event contracts, specifically a framework focused on the CFTC’s role in promoting market stability while also respecting state autonomy.
Acting Chairman Pham was named Chairman on January 20. The next day, she issued a statement calling for the CFTC “to get back to the basics.”8 The following day, she announced significant leadership changes, including a new Acting Chief of Staff, Acting General Counsel, and new Acting Directors for the Division of Enforcement, Division of Market Oversight, Division of Clearing and Risk, and Market Participants Division.9
In the last few weeks, Acting Chairman Pham has announced additional steps in furtherance of her pledge to work constructively with all stakeholders to ensure well-functioning markets and promote economic growth and U.S. competitiveness.10 On January 27, she announced a series of public roundtables on evolving trends and innovation in market structure, including issues such as affiliated entities and conflicts of interest, prediction markets, and digital assets.11 Subsequently, Acting Chairman Pham announced the CFTC will hold a “CEO Forum of industry-leading firms to discuss the launch of the CFTC’s digital asset markets pilot program for tokenized non-cash collateral such as stablecoins.”12 This builds on the work of the Global Market Advisory Committee, which Acting Chairman Pham sponsors, including its November 2024 recommendation to expand the use of non-cash collateral through the use of distributed ledger technology.13
With respect to enforcement, Acting Chairman Pham reorganized the Division of Enforcement’s task forces to combat fraud and help victims while ending the practice of regulation by enforcement.14 The creation of a Complex Fraud Task Force and a Retail Fraud and General Enforcement Task Force also marks the end of the CFTC’s prior enforcement task forces, one which focused on cybersecurity and the other which focused on emerging technology and environmental fraud. Acting Director Brian Young was appointed Director of the Division of Enforcement on February 14.15
On February 25, the Division of Enforcement published an Enforcement Advisory that addresses how it will evaluate self-reporting, cooperation, and remediation when considering enforcement actions and penalties.16 In a break from prior guidance, this release makes clear that entities can self-report to the agency's operating divisions (i.e., the Market Participants Division) rather than the Division of Enforcement.17 The advisory introduces a three-tier scale for self-reporting and a four-tier scale for cooperation, along with a mitigation credit matrix that provides penalties discounts ranging from 0% for no self-report and no cooperation to 55% for an exemplary self-report and exemplary cooperation.18 Commissioner Kristen Johnson did not support the advisory, suggesting that “deeper engagement” may have been beneficial to the development of the advisory.19
A Review of Brian Quintenz’s Commissionership and What it Means for the Future
Brian Quintenz was previously a Commissioner of the CFTC during the first Trump administration, serving from August 2017 until August 2021 after being unanimously confirmed by the U.S. Senate.20 During his time at the Commission, Quintenz promoted regulatory clarity and sought reasonable government regulation “balanced with individual freedom and dynamic innovation.”21 He also stressed the importance of staying ahead of technological advances to develop proper regulatory oversight.22
Enforcement
As a Commissioner, Quintenz supported enforcement matters that held market participants accountable for clear violations of the Commodity Exchange Act and CFTC regulations. His past statements focused on fairness and ensuring that entities “don’t skirt those rules to the disadvantage of U.S. customers and law-abiding market participants.”23 As Commissioner, Quintenz often focused on promoting innovation and counseled the CFTC against taking steps that might deter institutions from developing new products or services or engaging in market activity. He said in a 2018 speech, “I would much rather pursue engagement than enforcement—but in the absence of engagement, enforcement is our only option.24
Given this approach, we expect the Division of Enforcement to continue actively and aggressively pursuing violations of the CEA, while giving more latitude towards emerging technologies and products, such as decentralized finance and event contracts.
Regulatory Approach
Quintenz’s perspective on rulemaking during his time as Commissioner emphasized a “principles-based” approach, and he has previously expressed a preference for industry-driven solutions over prescriptive regulatory mandates.
For example, during his first public remarks as CFTC Commissioner in 2017, Quintenz criticized the agency’s then-recent proposal to regulate automated trading (“Reg AT”) as “poorly crafted and flawed public policy.”25 He advocated for more study of where specific risks existed with respect to automated trading and where controls were already in place to address those risks before proposing broad rulemaking.26 The Commission later withdrew Reg AT altogether in favor of proposing—and ultimately adopting—more limited “Electronic Trading Risk Principles.”27 Quintenz supported this move as embracing a principles-based approach rather than the “extremely prescriptive requirements” of Reg AT.
As Commissioner, Quintenz also supported the need for regulations that ensure market stability while promoting innovation.28 This perspective was evident across two areas that have remained salient topics for the Commission: (1) cryptocurrency and digital asset regulation and (2) event contracts.29
Quintenz promoted coordination between the CFTC and the SEC during his tenure at the CFTC. As Commissioner, he led efforts with SEC Commissioner Hester Peirce to coordinate and harmonize SEC and CFTC regulation impacting entities that were dually registered as swap dealers/security-based swap dealers, broker-dealer/futures commission merchants, and commodity pool operator/investment funds. We expect this collaborative relationship to continue, particularly with respect to Commissioner Peirce’s new Crypto Task Force, which was established to “help the Commission draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously” with respect to crypto asset markets.30
Digital Assets
Quintenz sponsored the CFTC’s Technology Advisory Committee during the launch of the first Bitcoin futures contracts,31 and during his term the Commission oversaw “the custody of digital assets within the traditional clearing infrastructure, the proliferation of blockchain technology, and the creation of crypto-graphic, tokenized commodities” and addressed other topics related to digital assets.32
Event Contracts
With respect to event contracts, as Commissioner, Quintenz criticized blanket prohibitions on certain event contracts without specific public interest findings. In December 2020, ErisX filed a self-certification that certain NFL event contracts met the requirements of the Commodity Exchange Act for a contract listed by a registered designated contract market (DCM). In his would-be dissent33 from the CFTC order disapproving the contracts, Quintenz took issue with the categorical prohibition of “gaming” as contrary to the public interest and advocated for a more precise regulatory approach.34 He also argued that such broad prohibitions contradict statutory requirements and disagreed with what he perceived as the burden being placed on the registrant (ErisX) to establish that the NFL event contracts serve a hedging function (and thus were in the public interest).
This issue is again a live issue for the Commission, as several contract markets have listed contracts related to sporting events, election outcomes, and other novel applications of event contracts.
Swap Dealer Regulation/Swap Market Oversight
As Commissioner, Quintenz highlighted that Dodd-Frank’s policy objectives for swap dealer registration include systemic risk reduction, counterparty protections, and market efficiency.35 He indicated that any adjustments to the de minimis threshold for swap dealer registration should align with these objectives, particularly ensuring that regulations effectively address the intended risks without imposing unnecessary burdens.
In line with this perspective, in a 2019 statement, Quintenz criticized the use of gross notional values as a metric for determining the swap dealer de minimis threshold, arguing that the figure is a poor measure of a dealer’s activity level and suggesting that the CFTC should consider metrics that are more representative of an entity’s market impact, moving away from a one-size-fits-all approach.36 Quintenz also advocated for excluding cleared swaps from the de minimis threshold calculation as, from his perspective, the majority of swap dealing activity would still be captured under the $8 billion threshold.37 He further advocated for a review and tailoring of the required swap dealer business conduct standard requirements, including certain disclosure obligations.
During his time as Commissioner, Quintenz supported flexibility in execution methods on SEFs.38 He also expressed support for harmonizing SEF regulations with international counterparts.39
"America First" Market Policy
This perspective is consistent with Quintenz’s overall approach to international regulatory coordination. While Commissioner, Quintenz promoted cross-border deference, encouraging home country regulators to serve as the primary point of contact for market participants. However, Quintenz strongly defended U.S. markets from foreign regulatory intervention, particularly from the European Union. He has emphasized the importance of maintaining trust in international regulatory relationships, particularly stressing how legislative changes abroad could negatively impact U.S. market participants.40
* * *
Based on former Commissioner Quintenz’s positions and Acting Chairman Pham’s initial actions, the CFTC appears to be poised to adopt a more principles-based, innovation-friendly regulatory approach while maintaining robust market oversight. The Commission’s ability to successfully execute on this vision may be impacted by resource limitations as it tackles an ambitious agenda, in addition to navigating complex political and market dynamics.
