CFTC Rolls Back Enforcement, Favors Trump Family, Allies
NEWS & RESEARCH
The Commodity Futures Trading Commission, which regulates trade in commodities and financial derivatives, has dramatically scaled back its enforcement under the Trump administration and is boosting, rather than policing, the growing cryptocurrency and prediction market industries.
In a recent action, the agency shut down the investigation of a commodities trading firm, Louis Dreyfus Company, at the direction of a Trump-appointed acting chairwoman, the New York Times has reported. CFTC lawyers had been readying civil charges against Louis Dreyfus, saying it misled markets about its cotton exports to China, thereby cheating American cotton farmers. The company was accused of deliberately hiding export deals, giving a false impression of actual demand, leading US growers to set their prices lower.
Since Trump took office, enforcement at the agency has fallen off dramatically. The regulator has filed an average of one new complaint a month for violations – about one fifth as many as under the Biden administration. Financial penalties imposed by the agency have plummeted as well, to fines worth $11 million so far in 2026, versus over $380 million at the same juncture two years ago.
The agency has also, since President Trump was elected, become a doormat for the fast-growing and lucrative cryptocurrency and prediction markets. Officials who raised questions about whether firms were treating small investors fairly, had sufficient protections against fraud, or had undergone adequate review before opening for business were put on leave and eventually pushed out. These industries have deep ties to the Trump family, and have generated enormous wealth for them – an estimated $1.4 billion in 2025.
Lax enforcement and oversight in the crypto and prediction markets increases the vulnerability to fraud and abuse of Americans who buy cryptocurrency or bet on predication markets. As these industries become interconnected with broader financial systems, risk becomes systemic.
SOURCES: New York Times | New York Times | The Dispatch | The Independent
ANALYSIS & OPINION
Since Trump took office, the CFTC, already a small agency, has cut its work force and pushed out career officials. With about 760 employees in 2015, it had about 550 workers in early 2026. Initially set up to watch for abuses in markets like farm goods, its portfolio has expanded to oversee a specialized but growing and highly lucrative sector of financial markets.
However, rather than policing against fraud and abuse, the agency’s political leadership has pursued steps to support and get out of the way of the businesses it is intended to oversee. The Trump administration’s first acting chairman of the commission, after sidelining regulatory actions, left to work for a cryptocurrency company. Prior to taking office, the current chairman, Michael S. Selig, represented crypto firms and worked as a lawyer with prediction markets. Political donors have used their influence to affect commission appointments and to expedite approvals.
Because President Trump has left the other seats vacant on what is meant to be a five-member, bipartisan commission, Selig is the lone commissioner, leaving him with unilateral authority to file lawsuits and issue new rules at a time when the industry is spending heavily and lobbying hard to shape business-friendly oversight.
Selig and the Trump administration argue they are reversing regulatory overreach and are focused on rooting out major abuses. However, the agency has announced far fewer cases against digital currencies than under the Biden administration.
Not only does this about face from watch dog to lapdog put individuals and the broader market at risk, it directly benefits firms associated with Trump and his sons: 1789 Capital, Trump Media & Technology, and American Bitcoin.
SOURCES: New York Times | New York Times | The Dispatch | Better Markets
HOW TO FIX IT
Federal action:
Legislation to enact a digital asset market structure, the Digital Asset Market Clarity Act of 2025 (CLARITY Act), died in the Senate in 2026.
Effective legislation on cryptocurrency must:
have adequate consumer protections
have broad ethics restrictions, including regarding whether officials can hold or trade digital assets as investments while carrying out policy responsibilities related to the digital asset industry maintain strong enforcement powers, including for state attorneys general and private parties
keep ethics provisions and enforceability in effect after the end of the current presidential term
sufficiently address money laundering and financial crime risks associated with the digital asset industry
not pre-empt state anti-fraud enforcement actions
strengthen provisions relating to market integrity and addresses any potential national security risks from unregulated digital asset markets.
Fill the four open positions on the CFTC board and rehire lawyers to truly enforce the laws.
Strengthen ethics and revolving-door rules. Require meaningful cooling-off periods and clear recusals for officials handling matters involving former or prospective employers.
Protect independent judgment. Give the CFTC stable funding and enough staff, economists, technologists, and enforcement capacity to analyze industry data and challenge industry-provided assumptions.
Sources: Yale Insights | Congressional Research Service | Better Markets | National Consumer Law Center | DLA Piper
