CFTC set for Republican majority as Democrat commissioner exits

The Commodity Futures Trading Commission (CFTC) will see a major political shift following Democratic Commissioner Christy Goldsmith Romero’s departure. Romero said that she would exit once Congress confirmed Brian Quintenz, currently the global head of policy at venture capital firm Andreessen Horowitz.

Quintenz will still need to secure confirmation from the US Senate—and a vote has yet to be scheduled—before he can take over from acting chair Caroline Pham.

If the Senate confirms Quintenz, Commissioner Kristin Johnson will be the lone Democratic member on the commission.

A Republican majority has the potential to shape the CFTC’s approach to market oversight, including its position on digital assets and financial derivatives.

No more than three commissioners can be from the same political party at a time, meaning once Quintenz joins, the final spot must be filled by a Democrat.

Goldsmith Romero eagerly contributed during her time as a federal officer

Christy Goldsmith Romero has 23 years of work in federal service and has held senior roles in various financial regulatory agencies. Before joining the CFTC, she served at the Securities and Exchange Commission (SEC) and the Special Inspector General for the Troubled Asset Relief Program (TARP) at the US Department of the Treasury. Throughout her career, she advocated for financial stability, market integrity, and the protection of investors.

In a statement on her resignation, Goldsmith Romero said she was grateful for the opportunity to serve and emphasized her commitment to sound financial regulation. She then noted how the strength of US financial markets, which she termed the “envy of the world,” has owed much to regulation throughout history.

As the CFTC chair, Goldsmith Romero has steered the derivatives market through expansions and geopolitical shocks. She prioritized market integrity and resilience and fixed the plumbing of the financial markets. Once prepared, her work focused on fraternal market stability and improving regulatory oversight.

Goldsmith Romero also made key advancements in mitigating emerging financial technology risks outside traditional financial markets. As the sponsor of the CFTC’s Technology Advisory Committee, she led efforts to prevent fraud and strengthen cybersecurity protections in emerging fields like artificial intelligence (AI) and blockchain.

Goldsmith Romero’s federal career path, noted as the first LGBTQ+ commissioner at the CFTC, shifted markedly after Trump’s victory because she’d previously been President Joe Biden’s pick to run the Federal Deposit Insurance Commission, though the Senate never got around to voting on the matter.

Republicans dominate, shifting the power balance in the CFTC

Goldsmith Romero’s resignation has important political and regulatory aspects. Her departure moves the CFTC’s balance of power even closer to Republican control, potentially affecting how the agency oversees holidays-related markets.

President Trump’s nominee, Brian Quintenz, should be returned to the commission but with a different regulatory philosophy. A previous commissioner, for example, lobbied for a more business-friendly regulatory environment that would radically change how the CFTC treats derivatives, commodities, and digital assets.

The cryptocurrency market is one of the sectors most affected by a change like this. In recent years, the CFTC has increasingly taken on a wide-ranging role overseeing financial products tied to crypto, and pending legislation in Congress would expand its jurisdiction even further. The exit of Goldsmith Romero, who was a grounding force for those wanting to put a regulatory stamp on the industry, and potentially, quite soon, confirmation of Biden’s Quintenz would make it a recipe for a friendlier industry.

Goldsmith Romero’s career trajectory mirrors the broader political forces shaping who governs financial markets. She is the person President Joe Biden nominated to head the FDIC, a nomination that failed to pass through the Senate. The drawn-out nomination period also illustrates the partisan roadblocks to filling top slots in financial regulatory agencies.

The new makeup of the CFTC could also sway key regulatory decisions. The agency regulates the US derivatives markets, encompassing futures, options, and swaps, and plays a crucial role in global financial stability. Under a stronger Republican majority, the CFTC might adopt a more hands-off approach to regulation, prioritizing market efficiency at the expense of rigorous enforcement.

However, a change of leadership also brings uncertainty. Institutional investors and others will scrutinize the new CFTC in the market as it shapes the direction of its regulatory enforcement, risk management, and financial innovation. The commission’s policies will touch on everything from agricultural commodities to energy markets to financial derivatives, impacting a wide cross-section of the economy.

Last March, Quintenz criticized the Gary Gensler-led SEC for how it dealt with Ether’s legal status. The regulator was inconsistent in its enforcement because, in October 2023, it approved Ether futures exchange-traded funds (ETFs), which Quintenz said is an acknowledgement that it isn’t a security.

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