The hotter the crypto market gets, the more nervous the CFTC becomes? The regulatory turmoil behind the struggle for control
TechFlow Selected TechFlow Selected
The hotter the crypto market gets, the more nervous the CFTC becomes? The regulatory turmoil behind the struggle for control
Next year, the CFTC will take over a multi-trillion-dollar market and will also move to a new office location in the Capitol Hill suburbs.
Navigating Web3 tides with focused insightsBy Lydia Beyoud, Nicola M White and Liam Vaughan, Bloomberg
Translated by Luffy, Foresight News
In March this year, at a conference hall in Boca Raton, Florida—near Mar-a-Lago—Caroline Pham, acting chair of the Commodity Futures Trading Commission (CFTC), took the neon-lit stage to deliver a speech marking the agency’s 50th anniversary.
Since its founding in 1975, when futures were primarily used by industrial firms and farmers, the CFTC has quietly grown into a regulator overseeing a market exceeding $50 trillion as financial derivatives exploded and cryptocurrencies emerged. But Pham wasn’t there to politely recount the CFTC’s accomplishments.
After brief pleasantries, Pham told attendees at the Futures Industry Association conference that the agency’s lawyers had filed too many lawsuits, imposed excessive fines, and rushed to rein in well-intentioned companies without first establishing basic rules. She also said the agency faced issues with “internal governance” and “misconduct” requiring “immediate corrective action.”
In some ways, it was surprising that Pham—an assistant Republican member on the CFTC’s bipartisan five-member commission—had even been selected for the top role, even if just temporarily. A former Wall Street compliance officer turned crypto advocate, she is highly active on social media. She gained attention for publicly calling out internal agency problems and criticizing certain staff members. “The degree to which the commission has strayed from the Constitution pains me,” she wrote in one public statement. In another: “This isn’t regulation through enforcement—it’s arbitrary regulation.” On LinkedIn, she posted: “I’m once again calling for mandatory CFTC staff training programs” to improve “basic competency.”
Staff Turmoil and Layoffs: Internal Chaos and Distrust
Now, seven months into what is typically seen as a transitional role, Pham has fired several senior managers, led at least a 15% workforce reduction due to case backlogs, and terminated a third of pending investigations. Her term was originally set to end this summer, when Brian Quintenz, a former CFTC commissioner nominated by President Donald Trump, was expected to take over. But Quintenz’s confirmation has stalled after Gemini co-founder Tyler Winklevoss complained that the nominee had too many conflicts of interest and wasn’t a genuine crypto supporter. The allegation was unexpected for someone who once led global policy at a16z. Quintenz is also a board member at prediction market Kalshi; he declined to comment for this article.
Cutting down a meticulous financial regulator like the CFTC may not spark the same outcry as slashing the Environmental Protection Agency, the Department of Education, or even the SEC. And during Pham’s predecessor’s tenure, the CFTC did face criticism for overregulation. Yet the health of this quiet agency matters deeply: futures and commodities are central to the global economy, driving transactions in energy, food, and finance, and influencing prices for everything from coffee and corn oil to gasoline. The 2008 financial collapse was partly caused by the proliferation of complex derivatives—products later brought under CFTC oversight.
More than two dozen current and former CFTC insiders and industry figures spoke anonymously with Bloomberg Businessweek about the agency’s inner workings. They said the CFTC’s enforcement operations are slow-moving, with only two of five commissioners from opposing parties, making it difficult to conduct key business. Some problems existed before Pham took office. Agency spokesperson Taylor Foy said, “Issues are now surfacing because we’re exposing them,” and all of Pham’s criticisms are aimed at helping “the CFTC and its staff reach their full potential” and fulfill the responsibilities assigned by the Trump administration. “Pham was never instructed to ‘sit back’ while leading the CFTC,” Foy said in a statement. “In fact, when she was appointed acting chair in January, she was directed to manage the CFTC as if she were a permanent chair.”
As the agency’s responsibilities and potential market risks continue to grow, turmoil persists. New measures are being developed that would allow cryptocurrency to permeate every corner of finance—from Americans’ retirement funds to the Treasury’s coffers. Prediction markets like Kalshi and Polymarket now let investors wager millions on real-world events such as elections. Meanwhile, the president and his family are diving headfirst into crypto.
The CFTC has about 640 employees and a budget just one-sixth that of the SEC. There are concerns it won’t be able to handle new responsibilities. “As new markets and technologies rapidly evolve, we need a regulator with sufficient resources and expertise to protect consumers, prevent financial crime, and promote responsible innovation,” said Dorothy DeWitt, former director of a CFTC division.
A White House spokesperson denied the CFTC was in disarray, stating: “President Trump has prioritized making America the global center for cryptocurrency, calling for revitalization of the Commodity Futures Trading Commission so it can play a greater role in achieving this goal. Acting Chair Caroline Pham has done an excellent job advancing this work, and the Trump administration thanks her for her leadership and dedicated public service.”
Pham has served multiple stints at the CFTC, first becoming a commissioner in 2022. After taking over as acting chair in January, she fired the HR director, who had been investigating union allegations from 2023 that the CFTC allowed Pham to mistreat and intimidate staff during internal meetings on enforcement matters.
Pham denies any intimidation, and Foy said the National Treasury Employees Union complaint offered a “false and unfair” portrayal of “detailed and substantive discussions.” “As a commissioner, some of my comments and questions to staff weren’t always welcome,” she said in a statement last year. “Telling hard truths can be jarring, but it’s essential for governance and oversight to ensure accountability.”
The CFTC said the HR director was dismissed due to a series of administrative failures, including failing to address abuse of the agency’s remote work policy and allowing actions that “illegally targeted Republicans and violated the First Amendment.” Earlier this month, the agency announced it would review employee compliance with attendance requirements, citing a former employee who allegedly worked remotely abroad while serving as chair of the CFTC branch of NTEU, violating government policy. An initial investigation into the NTEU complaint was never completed, but a law firm concluded in 2025 that commissioners aren’t bound by the agency’s harassment policies, and in any case, Pham hadn’t violated internal rules.
Pham also removed the agency’s chief financial officer. According to sources, tensions arose over Pham’s business travel requests and demands that the CFTC cover her commuting costs between Washington and New York. Foy said all of Pham’s agency-funded travel complied with government rules and was approved by ethics officials, calling it “untrue” to suggest the CFO was reassigned due to disagreements over travel. Personnel changes “were not personal, but addressed specific and ongoing concerns about CFTC programs, procedures, and efficient use of taxpayer funds,” Foy said. “After assuming the role of acting chair, Pham made several personnel adjustments common in a new administration, including regarding the CFO position.” The former HR director declined to comment; the former CFO did not respond to requests for comment.
Some senior professionals accepted Elon Musk’s government-wide voluntary resignation offer. A wave of departures at the end of the Biden administration further eroded institutional experience. After a Supreme Court ruling paved the way for large-scale federal layoffs, the CFTC announced in July it would cut 24 more positions across market surveillance, enforcement, and data divisions. Foy said these layoffs were “part of an ongoing reorganization to reduce unnecessary reporting layers.”
The attrition has been particularly severe in the enforcement division, which investigates everything from multibillion-dollar fraud cases like Sam Bankman-Fried’s FTX to routine record-keeping violations. In its fiscal 2026 budget request, the agency asked to reduce enforcement staff by 30% compared to fiscal 2024. Pham has also restructured the department.
Pham, who once interned in enforcement, pointed to the handling of the My Forex Funds case as proof of the need for sweeping reform. In 2023, the CFTC accused the online trading platform of being a Ponzi scheme and sought asset freezes, wrongly claiming payments the company made to tax authorities were attempts to “move millions of dollars beyond government reach.” When agency lawyers failed to properly correct the record, a judge dismissed the case, ordering the CFTC to pay nearly $3.2 million in sanctions and reimburse My Forex Funds’ legal fees.
After the ruling, Pham issued a statement saying it was “heartening” that the judge referenced her prior concerns about the CFTC bringing the case, implying it showed how far the agency had fallen. “This case clearly illustrates a long-standing culture within the division of ‘CFTC above the law,’ where violations are justified simply because the CFTC is a government agency,” she wrote. After the case failed, the regulator suspended four Chicago-based lawyers and one investigator.
To clear a backlog of unresolved cases, Pham announced an initiative she called an “enforcement sprint” during her Boca Raton speech, inviting companies to proactively reach out within two weeks to seek reduced penalties. The plan positioned Pham as a Trump-style “dealmaker.” But in practice, progress has been limited: although nearly 24 companies tried to strike deals, no agreements have yet been announced. According to one person familiar with the matter, six “sprint” settlements are awaiting approval from Democratic commissioner Kristin Johnson on the commission. Johnson declined to comment.
Besides layoffs, the CFTC has also cut spending on some tools used to investigate crypto trading, including canceling a contract in March. Foy said the cancellation followed government cost-cutting directives and that the department had another service capable of meeting the same needs.
Multiple interviewees said resentment and suspicion now permeate the CFTC’s Washington headquarters and offices nationwide, fueled by layoffs and criticism. Some said lawyers are now afraid to propose new cases or even issue subpoenas. Foy called such claims “absurd.” Three of the five politically appointed commissioners have resigned—with no replacements named yet (commissioners must vote on corporate penalties or fines)—further paralyzing the agency. With only one Republican and one Democrat remaining, operations are gridlocked. “I can’t get bank records or evidence. I can’t do anything,” one lawyer complained.
“Acting Chair Pham should not be blamed for any gridlock,” said Foy, who became the CFTC’s spokesperson after Pham took over. He added that internal analysis showed some regional offices reduced new case filings during the final year of the Biden administration, and that Pham has worked to support agency staff. “She recognizes employee achievements and strives to resolve issues before they escalate,” he said.
At the end of May, Brian Young, the enforcement director appointed by Pham, accepted a buyout after three months. Young previously led the agency’s whistleblower office and tried to encourage staff upon departure, acknowledging their work could be tough and thankless even under ideal conditions. “On your hardest days, I hope you can find comfort in knowing the country needs you,” he wrote in an email to colleagues. Young declined to comment. In June, the agency welcomed Paul Hayeck as the new acting enforcement director. “We still have the capabilities we’ve always had,” Hayeck said.
The data speaks for itself. Since Pham took power on January 20, the CFTC has announced only one new enforcement action. By contrast, there were over 12 actions in the first half of 2024 and over 24 during the same period in 2023. The agency has stopped fining crypto firms for registration violations—something that triggered numerous actions in recent years. A similar slowdown in enforcement has occurred at the SEC, the Justice Department, and the Consumer Financial Protection Bureau. In May, Trump issued an executive order vowing to curb what he called the “ridiculous and unfair” over-criminalization in American society.
Expanding Responsibilities and Resource Constraints: Crypto Regulation as a New Challenge
Just as the CFTC’s authority is weakening, its responsibilities are poised to expand. In July, Congress passed a landmark crypto-related bill covering instruments like stablecoins. Another comprehensive Clarity Act has passed the House and is headed to the Senate. If enacted, it would create the industry’s first full legal framework. But critics—including Senator Elizabeth Warren of Massachusetts and former Democratic CFTC Chair Timothy Massad—say the legislation does too little to protect consumers, combat money laundering, or prevent conflicts of interest, and contains loopholes. Warren called the bills a handout to an industry that spent $230 million on the 2024 election.
The Clarity Act defines most cryptocurrencies—including Bitcoin and Ethereum—as “digital commodities.” This means the bulk of regulatory responsibility for markets would fall to the CFTC rather than the much larger SEC. But it remains unclear how many additional staff and resources the agency will receive to handle this significantly expanded mandate.
“The CFTC is probably the most overlooked and underfunded financial institution in the federal government,” said Carol Goforth, a University of Arkansas law professor who studies digital asset regulation. “Does it have the capacity to handle all this? Certainly not.”
But Walt Lukken, a Republican and former CFTC acting chair, said the agency “certainly has the legal authority and proper management capability” to “meet this challenge.”
“Caroline is highly capable and intelligent, doing her best to advance President Trump’s agenda,” Lukken said.
Meanwhile, the Trump family continues to increase its investments. To date, they have stakes in crypto trading platforms, stablecoins, non-fungible tokens (NFTs), crypto mining operations, and various meme coins. According to Bloomberg analysis, although Trump’s assets are held in a trust managed by Donald Trump Jr., he has added $620 million in wealth from the sector in just the past few months.
“People in crypto don’t like what he’s doing,” said Massad, now director of the digital asset policy program at Harvard Kennedy School. He called Trump’s launch of a meme coin two days before inauguration—after reportedly collecting millions in fees, the token’s value plummeted 80%—a “disgrace to the industry.”
“The president and his family have never had, and will never have, conflicts of interest,” said White House spokesperson Karoline Leavitt. “The media’s constant attempts to fabricate conflicts of interest are irresponsible and only deepen public distrust in what they read.”
Cryptocurrency has long operated relatively independently from the broader economic system, but that is changing. Lawmakers are pushing to include virtual currencies in ordinary Americans’ 401(k) retirement plans, and FOMO-driven banks and asset managers are announcing blockchain initiatives. Stablecoins backed by low-risk assets like Treasuries are linking digital markets to mainstream finance. Trump has even issued orders to place seized cryptocurrencies into a digital asset “reserve” for law enforcement.
Beyond crypto, the CFTC recently approved large-scale prediction markets. For decades, Americans were barred from placing big bets on real-world events like politics and sports via derivatives, due to fears this would encourage gambling or undermine democracy by giving insiders incentives to influence outcomes. Kalshi—which hired Donald Trump Jr. as a special advisor in January—successfully challenged this rule in 2024 and became one of the first federally licensed exchanges to list political event contracts. Others have followed suit, ushering in a new era where Americans can bet millions not just on “who will win a Grammy,” but also on whether Pete Hegseth or Tulsi Gabbard will leave the presidential cabinet first.
Several former CFTC officials testified that the agency lacks the resources to properly review the large volume of new contracts weekly listed by Kalshi and its competitors on their websites. Meanwhile, state regulators and tribal leaders are suing Kalshi, accusing it of circumventing jurisdiction and operating sports betting under the guise of derivatives trading. Kalshi denies the allegations.
Quintenz’s Stalled Nomination: Uncertainty Over CFTC’s Future
CFTC employees joke darkly that the government hasn’t appointed a permanent chair because it forgot the agency exists. If Quintenz’s nomination is eventually approved, he’ll have plenty to deal with—especially boosting morale. But his confirmation is no longer guaranteed.
This summer, the CFTC released a trove of internal emails in response to Freedom of Information Act requests. The messages show communications between the agency and Quintenz—and one potential aide—about hiring, licenses the CFTC was considering, and the public status of litigation involving PredictIt, a Kalshi competitor. Kalshi’s CEO said Quintenz had not participated in board affairs since late last year; supporters argue such inquiries are normal for a chair hoping to hit the ground running. But critics, including Winklevoss, seized on the emails, claiming Quintenz has conflicts of interest and should be disqualified. The White House issued a statement supporting Quintenz in late July, but it’s unclear when the Senate will vote.
According to Quintenz’s ethics disclosure, if confirmed, he will leave the boards of a16z and Kalshi and divest his interests in both. At a June Senate hearing, he pledged to appoint an internal “ethics monitor” and recuse himself from relevant matters when appropriate. But this could create new challenges.
With three commissioners already gone, the sole remaining Democratic commissioner preparing to leave, and Pham saying she will also step down, Quintenz could end up as a “one-person commission”—more commander than chair. Some analysts say this situation, while unprecedented, might not necessarily hinder operations. Trump has already fired Democratic representatives from the Federal Trade Commission and the National Labor Relations Board, disregarding long-standing bipartisan traditions. When pressed by senators on whether he wanted a full complement of commissioners, Quintenz responded that while he values input, “I won’t be telling the president how to run his administration.”
Next year, the CFTC will oversee new markets worth trillions of dollars—and move to a new office near Capitol Hill, half the size of its current headquarters and far less grand. Contracts have been signed, but even with fewer employees, the new space will be cramped under Trump’s order requiring all federal workers to return to full-time in-office work. The complex is named “Patriot Plaza.”
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
@Bloomberg
