Original authors: Lydia Beyoud, Nicola M White, and Liam Vaughan, Bloomberg

Original compilation: Luffy, Foresight News

In March of this year, in a conference hall in Boca Raton, Florida, not far from Mar-a-Lago, Commodity Futures Trading Commission (CFTC) acting chair Caroline Pham stepped onto a neon-lit stage to deliver a speech commemorating the agency's 50th anniversary.

Since 1975, when futures were primarily used by industrial companies and farmers, the CFTC has quietly regulated a market exceeding $50 trillion in size, amid the explosive growth of financial derivatives and the emergence of cryptocurrencies. However, Pham's visit was not to politely recount the CFTC's achievements.

After some pleasantries, Pham told attendees at the Futures Industry Association meeting that the CFTC's lawyers had filed too many lawsuits, imposed excessive fines, and were eager to constrain well-intentioned companies without first establishing basic rules. She also stated that the agency faced issues of "internal governance" and "misconduct," requiring "immediate corrective action."

In some respects, it was surprising that Pham, a relatively junior Republican on the bipartisan five-member CFTC commission, became a candidate for this top position. She was previously a compliance officer on Wall Street and later became a cryptocurrency advocate, being very active on social media. She garnered attention for publicly pointing out internal issues within the agency and criticizing some employees. "The extent to which the commission has strayed from the Constitution pains me," she wrote in a public statement. Another statement claimed, "This is not regulation through enforcement; this is arbitrary regulation." She also posted on LinkedIn, "I once again call for a mandatory CFTC employee training program" to enhance "basic knowledge levels."

Personnel Turmoil and Layoffs: The Agency is in Chaos and Distrust

Now, seven months into her typically viewed "transitional" role, Pham has dismissed several senior executives, led layoffs of at least 15% of staff citing case backlogs, and terminated one-third of pending investigations. Her term was originally expected to end this summer, when Brian Quintenz, the formal nominee from President Donald Trump, was anticipated to take over. However, Quintenz's appointment process has been stalled due to complaints from Tyler Winklevoss, co-founder of cryptocurrency exchange Gemini, who claimed that the candidate had too many conflicts of interest and was not a true cryptocurrency supporter. This accusation was surprising for someone who previously led global policy affairs at a16z. Quintenz is also a board member of the prediction market Kalshi, and he declined to comment for this article.

Cuts to the CFTC, a rigorous financial regulatory agency, may not provoke the same strong protests as cuts to the Environmental Protection Agency, the Department of Education, or even the SEC. During Pham's predecessor's tenure, the CFTC indeed faced criticism for overregulation. However, the status of this low-profile agency is crucial: futures and commodities are at the core of the global economy, driving transactions in energy, food, and finance, affecting the prices of all commodities from coffee and corn oil to gasoline. The 2008 financial system collapse was partly due to the proliferation of complex derivatives, which later fell under the CFTC's regulatory purview.

More than twenty current and former CFTC insiders and industry professionals candidly discussed internal affairs with Bloomberg Businessweek on the condition of anonymity. They indicated that the CFTC's enforcement work has been slow, with only two of the five commissioners coming from opposing parties, making it difficult for the CFTC to carry out its key business. Some issues existed before Pham took office. Agency spokesperson Taylor Foy stated, "The problems are becoming apparent now because we are exposing them," and that all of Pham's criticisms were aimed at helping "the CFTC and its staff reach their full potential" and fulfill the responsibilities assigned to her by the Trump administration. "Pham has never been asked to 'stand by' while leading the CFTC," Foy said in a statement, "In fact, when she was appointed acting chair in January, she was instructed to manage the CFTC like a permanent chair."

As the agency's responsibilities and potential market risks continue to grow, the turmoil persists. New related measures are being developed that will allow cryptocurrencies to permeate every corner of finance, from Americans' retirement funds to the Treasury's coffers. Prediction markets like Kalshi and Polymarket allow investors to bet millions on the outcomes of real-world events like elections. Meanwhile, the president and his family are making significant inroads into the cryptocurrency space.

The CFTC has about 640 employees, with a budget only one-sixth that of the SEC. There are concerns that it will struggle to meet new responsibilities. "As new markets and technologies rapidly develop, we must have a regulatory agency with sufficient resources and expertise to protect consumers, prevent financial crime, and promote responsible innovation," said former CFTC division director Dorothy DeWitt.

A White House spokesperson denied that the CFTC is in chaos, stating, "President Trump has made 'making America the global cryptocurrency center' a priority, calling for a revitalization of the Commodity Futures Trading Commission to play a greater role in achieving this goal. Acting Chair Caroline Pham is doing a great job advancing this work, and the Trump administration appreciates her leadership and focused public service."

Pham has served multiple terms at the CFTC, first becoming a commissioner in 2022. After taking over as acting chair in January, she fired the human resources director. This official was previously responsible for investigating union allegations from 2023, when the union claimed that the CFTC allowed Pham to abuse and intimidate employees during internal meetings regarding enforcement matters.

Pham denied any intimidation, and Foy stated that the complaints from the National Treasury Employees Union provided a "false and unfair" description of "detailed and substantive discussions." "Some of my comments and questions to staff as a commissioner are not always well-received," she said in a statement last year, "Speaking the truth can be uncomfortable, but it is essential for governance and oversight to ensure accountability."

The CFTC stated that the dismissal of the human resources director was due to a series of administrative failures, including not addressing abuses of the agency's remote work policy and allowing "illegal targeting of Republicans, violating the First Amendment." Earlier this month, the agency announced it would review employee compliance with attendance requirements and mentioned a former employee who allegedly violated government policy by working remotely abroad while serving as president of the CFTC branch of the NTEU. A preliminary investigation into the NTEU complaints was never completed, but a law firm concluded in 2025 that commissioners are not bound by the agency's harassment policies and that, in any case, Pham did not violate agency rules.

Pham also removed the agency's chief financial officer. According to insiders, the two had clashed over Pham's requests for business travel and her demands for the CFTC to cover her commuting expenses between Washington and New York. Foy stated in a statement that all travel expenses incurred by Pham were in compliance with government regulations and had been approved by the agency's ethics officials, "implying that the chief financial officer was reassigned due to disagreements with her on travel issues is inaccurate." The personnel changes "are not personal but are aimed at addressing specific and ongoing concerns about the efficient use of CFTC programs, processes, and taxpayer funds," Foy said, "After taking over as acting chair, Pham made several personnel adjustments, which is common in a new administration, including the chief financial officer position." The former human resources director declined to comment; the former chief financial officer did not respond to requests for comment.

Some senior professionals at the agency accepted a voluntary resignation proposal put forth by Elon Musk within the government. A series of departures had already weakened the agency's internal experience toward the end of the Biden administration. After a Supreme Court ruling paved the way for large-scale federal layoffs, the CFTC announced in July that it would lay off another 24 employees, affecting departments such as market oversight, enforcement, and data. Foy stated in a statement that these layoffs are "part of an ongoing restructuring effort aimed at reducing unnecessary reporting layers."

The departures from the enforcement division, which is responsible for investigating a range of cases from the billions in fraud involving Sam Bankman-Fried's FTX to ordinary record violations, are particularly severe. The agency requested a 30% reduction in the number of enforcement personnel in its budget application for fiscal year 2026 compared to fiscal year 2024. Pham also restructured that department.

Pham, who previously interned in the enforcement division, pointed out that the handling of the My Forex Funds case demonstrated the need for comprehensive reform. In 2023, the CFTC charged the online trading platform with being a Ponzi scheme and sought asset freezes, incorrectly categorizing the company's payments to tax authorities as "attempts to transfer millions of dollars out of government oversight." When agency lawyers failed to properly correct the record, the 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 noting that the judge referenced her previous concerns about the CFTC bringing this case, which was "reassuring," and suggested that this indicated the agency had fallen to a low point. "This case clearly shows that for a long time, there has been a culture of 'CFTC above the law' in the department, believing that violations are acceptable simply because the CFTC is a government agency," she wrote. Following the case's failure, the regulatory agency suspended four lawyers and one investigator in Chicago.

To clear the backlog of pending cases, Pham announced an initiative she called "enforcement sprint" during her speech in Boca Raton, inviting companies to proactively reach out within two weeks to seek reduced fines. This plan positioned Pham as a sort of Trump-like "deal maker." However, in reality, the initiative has struggled to advance: despite nearly 24 companies attempting to reach agreements, no deals have been announced so far. According to an insider, six "sprint" settlement agreements are awaiting processing by Democrat Kristin Johnson on the commission. Johnson declined to comment.

In addition to layoffs, the CFTC has also reduced some expenditures on tools for investigating cryptocurrency trading, including a contract that was canceled in March. Foy stated that the cancellation of the contract was in accordance with government cost-cutting directives and that the department has another service to meet the same needs.

Multiple interviewees indicated that the atmosphere at the CFTC's Washington headquarters and offices across the country is filled with resentment and distrust, stemming from layoffs and criticism. Some said that lawyers are hesitant to propose new cases or even to request subpoenas. Foy called this assertion "absurd." Of the five politically appointed commissioners, three have resigned, and no one has yet been appointed to replace them (commissioners must vote to decide on sanctions or fines against companies), exacerbating the agency's inertia. With only one Republican and one Democrat remaining in office, operations have become gridlocked. "I can't get bank records, I can't get evidence. I can't do anything," one lawyer complained.

"Acting Chair Pham should not be held responsible for any gridlock," Foy stated. After Pham took office, Foy became the CFTC spokesperson. He also mentioned that internal analysis found that in the last year of the Biden administration, some regional offices reduced the filing of new cases; Pham has worked to support agency staff. "She recognizes employees' achievements and strives to address issues before they escalate," he said.

At the end of May, Brian Young, the head of the enforcement division appointed by Pham, accepted a buyout after three months in office. Young, who previously led the agency's whistleblower office, attempted to inspire staff upon his departure, acknowledging that even under the best circumstances, their work could be both challenging and thankless. "In your toughest days, I hope you can find comfort in the fact that 'the nation needs you,'" he wrote in an email to colleagues. Young declined to comment. In June, the agency welcomed a new acting head of enforcement, Paul Hayeck. "We still have the capabilities we had before," Hayeck said.

The data itself illustrates the problem. Since Pham took charge on January 20, the CFTC has announced only one new enforcement action. In contrast, there were over 12 actions in the first six months of 2024 and over 24 in the same period of 2023. The agency has stopped imposing fines for registration violations by cryptocurrency companies, which had been the basis for multiple actions in recent years. The SEC, Department of Justice, and Consumer Financial Protection Bureau have also experienced similar slowdowns in enforcement. In a May executive order, Trump vowed to curb what he called the "absurd and unjust" over-criminalization in American society.

Expansion of Regulatory Responsibilities and Resource Constraints: Cryptocurrency Regulation Becomes a New Challenge

As the CFTC's power is being diminished, the agency's responsibilities are set to expand. In July, Congress passed a landmark cryptocurrency-related bill concerning tools like stablecoins. Another comprehensive Clarity Act has passed the House and is now under consideration in the Senate. If enacted, the bill will establish a comprehensive legal framework for the industry for the first time. However, critics such as Massachusetts Senator Elizabeth Warren and former Democratic CFTC Chair Timothy Massad argue that the legislation does not do enough to protect consumers, combat money laundering, or prevent conflicts of interest, and that it contains loopholes. Warren described these bills as "charity" to an industry that "invested $230 million in the 2024 election."

The Clarity Act defines most cryptocurrencies, including Bitcoin and Ethereum, as "digital commodities." This means that most of the regulatory responsibilities for the market will fall to the CFTC rather than the much larger SEC. However, it remains unclear how many additional employees and resources the agency will allocate to handle this significant increase in responsibilities.

"The CFTC may be the most overlooked and underfunded financial institution in the federal government," said Carol Goforth, a professor at the University of Arkansas School of Law studying digital asset regulation. "Does it have the capacity to handle all of this? Certainly not."

However, Republicans and former CFTC acting chair Walt Lukken stated that the agency "certainly has the legal authority and appropriate management capacity" to "meet this challenge."

"Caroline is exceptionally capable and intelligent, and she is working hard to advance President Trump's agenda," Lukken said.

Meanwhile, the Trump family continues to increase its investments. To date, they have interests in cryptocurrency trading platforms, stablecoins, non-fungible tokens (NFTs), cryptocurrency 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 industry in just the past few months.

"People in the cryptocurrency space do not like what he is doing," said Massad, who currently serves as the director of the Digital Asset Policy Project at Harvard Kennedy School. He noted that Trump launched a meme coin two days before his inauguration, and after reportedly charging millions of dollars, the token's value plummeted by 80%, calling the decision "a disgrace to the industry."

"The president and his family have never, and will never, be involved in conflicts of interest," White House spokesperson Karoline Leavitt stated. "The media continually tries to fabricate conflicts of interest, which is irresponsible and only exacerbates public distrust in what they read."

For a long time, cryptocurrencies have been relatively independent of the broader economic system, but that is changing. Legislators are pushing to include virtual currencies in ordinary Americans' 401(k) retirement plans, while banks and asset management companies driven by FOMO are announcing blockchain-related projects. Stablecoins, backed by low-risk assets like government bonds, connect the digital market with mainstream markets. Trump has even issued an order requiring that cryptocurrencies seized by law enforcement agencies be included in digital asset "reserves."

In addition to cryptocurrencies, the CFTC has recently approved large-scale prediction markets. For decades, Americans have been prohibited from making large bets on real-world events like politics and sports using derivatives, due to concerns that it would promote gambling or incentivize insiders to profit by influencing outcomes, thereby undermining democracy. Kalshi (which hired Donald Trump Jr. as a special advisor in January) successfully challenged this regulation in 2024, becoming one of the first exchanges to receive federal approval to list political event contracts. Other agencies have followed suit, ushering in a new era: Americans can now bet millions on "who will win the Grammy Awards" and 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 number of new contracts that Kalshi and its competitors list on their websites each week. Meanwhile, state regulators and tribal leaders are suing Kalshi, accusing it of circumventing jurisdiction and conducting sports betting under the guise of derivatives trading. Kalshi denies these allegations.

Quintenz's Appointment Stalemate: Uncertainty for the CFTC's Future

CFTC employees jokingly lament that the government has not appointed a permanent chair because they forgot the agency exists. If Quintenz's appointment is ultimately approved, he will have a lot on his plate, especially in terms of boosting employee morale. However, his appointment is no longer a certainty.

This summer, the CFTC released a large number of internal emails in response to requests under the Freedom of Information Act. The emails show that the agency communicated with Quintenz and one of his potential aides regarding hiring, the licensing the CFTC was considering, and the status of litigation related to Kalshi's competitor PredictIt. Kalshi's CEO stated that Quintenz has not participated in board matters since the end of last year; supporters of Quintenz argue that such inquiries are normal for a chair who hopes to hit the ground running after taking office. However, critics, including Winklevoss, seized on these emails, claiming that Quintenz has conflicts of interest and should have his appointment rescinded. The White House issued a statement in late July supporting Quintenz, but it remains unclear when the Senate will vote on the matter.

According to Quintenz's ethical disclosure documents, if confirmed, he will leave the boards of a16z and Kalshi and divest his interests in both. During the Senate hearing in June, he promised to appoint an internal "fairness reviewer" and recuse himself from related matters when appropriate. However, this may pose new challenges for the agency.

Currently, three commissioners have resigned, and the remaining Democratic commissioner is also set to leave, with Pham stating that she will also depart. As a result, Quintenz is likely to find himself in a "one-person commission" situation, more of a commander than a chair. Some analysts say that while this situation is unprecedented, it may not necessarily hinder the agency's operations. Trump has already dismissed Democratic representatives from the Federal Trade Commission and the National Labor Relations Board, disregarding the long-standing tradition of bipartisan cooperation. When senators pressed Quintenz on whether he would prefer the CFTC to have a full complement of commissioners, he responded that while he values others' opinions, "I will not dictate to the president."

Next year, the CFTC will take over new markets worth trillions of dollars and will also move to a new office location in the suburbs of Capitol Hill, which will be only half the size of the current headquarters and far less grand. Contracts have been signed, but even with a reduced staff, the new office will still be quite crowded under Trump's directive for all federal employees to return to work full-time. This complex is called "Patriot Plaza."

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