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In other news from last month, we found out that Brian Quintenz was nominated by President Trump to serve as the next CFTC Chair. See our synopsis on Quintenz below. If and when Quintenz is confirmed—TBD on when the Senate vote will take place—there has been no news yet about where Acting Chair Pham may end up. In the meantime, however, she has been focused on reshaping the CFTC in a manner that “implements the Administration’s Executive Order” and her own principles set forth in her past dissenting opinions, which we summarized in last month’s The Desk. Commissioner Christy Goldsmith Romero has announced that she plans to step down from the CFTC as soon as Quintenz is confirmed. Assuming Quintenz is in and Goldsmith Romero is out, Commissioner Kristin Johnson will be the only remaining Democrat, meaning the fifth spot on the Commission must be filled by a Democrat.
Enforcement Round-Up
Brian Young has been officially promoted from Acting Director of Enforcement to Director of Enforcement.
Here is a link to a round-up of last month’s CFTC enforcement actions.
CFTC Refocuses Enforcement on Fraud and Helping Victims
The CFTC has announced a major reorganization of its Division of Enforcement’s task forces designed to enhance the agency’s ability to combat fraud and protect victims. The new structure aims to make the enforcement program more efficient and focused on pursuing fraudsters without unfairly targeting innocent parties. It is also consistent with Acting Chair Pham’s view that the CFTC should be moving away from regulation or “examination by enforcement,” where it exacts heavy penalties for non-material, technical or operational rule violations that have no impact on clients or the markets.
As part of this reorganization, the CFTC is consolidating its previous task forces into two new units. The Complex Fraud Task Force will handle complex fraud and manipulation cases across all asset classes. The Acting Chief will be Deputy Director Paul Hayeck. The Retail Fraud and General Enforcement Task Force will focus on retail fraud and other violations of the Commodity Exchange Act. The Acting Chief will be Deputy Director Charles Marvine.
CFTC Releases Enforcement Framework on Self-Reporting, Cooperation, and Remediation
In last month’s The Desk, we said it will be interesting to see if Acting Chair Pham makes good on her longstanding view that the CFTC adopt a clear standard on self-reporting and cooperation credit. It appears that Acting Chair Pham has—again—quickly delivered on her word. On February 25, the Division of Enforcement released an “advisory on how the Division will evaluate a company’s or individual’s self-reporting, cooperation, and remediation when recommending enforcement actions to the Commission.” According to Acting Chair Pham, the Advisory is intended to “enable the CFTC to do more with less and free up enforcement resources” for the focus areas of fraud and manipulation that we discussed above. The Advisory is intended to be the “exclusive” DOE policy on how self-reporting, cooperation, and remediation will be evaluated moving forward, although the Advisory clarifies that “the Division maintains the discretion to consider the unique facts and circumstances in every case, and may also consider a variety of other factors [e.g., recidivism] in formulating
recommendations to the Commission.” Included in the Advisory is a “Mitigation Credit Matrix” that outlines the percentage reduction in potential civil penalty for varying levels of self-reporting and cooperation, with up to a 55% penalty reduction for “exemplary” self-reporting and cooperation.
Commissioner Johnson issued her own statement declining to support the Advisory, specifically stating “[w]e must exercise caution when advancing new reporting, cooperation, and remediation regimes or rescinding long-standing guidance.”
Tiffany Payne, Yiran Jiang | Email
Brian Quintenz CFTC Chair Nomination
In February, President Trump nominated Brian Quintenz to serve as Chair of the CFTC. Quintenz most recently worked as the Head of Policy at a16z crypto, Andreessen Horowitz’s cryptocurrency arm. Quintenz previously served as a Commissioner at the CFTC between 2017 and 2021, spanning both the Obama and Trump administrations. Like Acting Chair Pham, Quintenz comes to the role of CFTC Chair with a history of precedent from his time as a CFTC Commissioner. Let’s focus on Quintenz’s statements when (1) he first anticipated he would end his term in April 2020 and (2) then the statement in August 2021 when Quintenz stepped down and a new Commissioner had been found to replace him.
In both statements, Quintenz said he centered his time at the CFTC on three broad themes: (1) ensuring the CFTC is focused on risks, with rules appropriately tailored to those risks; (2) embracing the rapid advancement of technology and innovation in finance; and (3) working for enhanced coordination and deference among domestic and international regulators.
Quintenz also called out his work on overseeing the listing of Bitcoin futures, the custody of digital assets within the traditional clearing infrastructure, the advancement of blockchain technology, and the creation of cryptographic, tokenized commodities.
Both statements also echo the importance of not relying on a one-size-fits-all approach to identifying risks in the derivatives market – much like Acting Chair Pham’s belief in tailoring the CFTC’s approach to larger market participants. Similarly, Quintenz was instrumental in the CFTC’s approach to engaging with regulators in foreign jurisdictions and advocated for a deference-based regulatory framework that respects each jurisdictions own interests.
What does all of this mean for the CFTC going forward? We expect Quintenz’s policies will follow closely to his three broad themes listed above. We also anticipate Quintenz to advocate and implement principles-based rules for digital assets, while also applying a commonsense approach to the issues larger market participants face.
One other nugget that I’ll share is that Quintenz has been a Board member of prediction market Kalshi since 2021. Kalshi is no stranger to the CFTC. Kalshi has been involved in litigation with the CFTC after Kalshi sued the CFTC concerning Kalshi’s ability to allow users on its platform to engage in election betting. Separately, on January 31 of this year, the CFTC’s Divisions of Market Oversight and Clearing and Risk announced their no-action position regarding alleged swap data reporting and recordkeeping violations by Kalshi. Quintenz has not yet provided a clear indication of whether he will recuse himself from issues
related to prediction markets if he is confirmed as Chair.
Presuming Quintenz is confirmed, we look forward to his tenure as Chair of the CFTC. We also cannot wait to see what Acting Chair Pham does next, and we have it on good authority to “stay tuned”.
Barrett Morris, Tiffany Payne | Email
Banking Agency Consolidation?
Bloomberg reported in February that the Trump administration is preparing to transfer federal employees working at the FDIC and the CFPB to the OCC as part of a broad overhaul of the US banking agencies. Specifically: “The OCC has created email distribution lists for FDICTransferees@occ.treas.gov, CFPBTransferees@occ.treas.gov, and CFPBTeam@occ.treas.gov, according to Outlook templates obtained by Bloomberg Law from multiple sources at different agencies who were granted anonymity to prevent retaliation.”
The Wall Street Journal also reported that the Trump administration is making plans to consolidate the FDIC into the Treasury Department and combine their regulatory role with the OCC. Both news outlets report that the proposal would leave the FDIC in charge of the deposit insurance, but the OCC would take over the FDIC’s role of winding down failed banks. If the CFPB were to merge into the OCC, the OCC would in theory be tasked with the CFPB’s broad consumer financial protection mandate.
President Trump previously entertained the idea of merging the SEC and the CFTC and in response the Department of Treasury put out a report under then Secretary Steven Mnuchin, which stated that the “efficiencies and synergies” of merging the agencies would be “limited” because the two agencies serve to different fundamental purposes: capital formation and investment versus hedging and risk transfer. Interestingly, President Trump’s current nominee for Chair of the SEC, Paul Atkins, was once quoted as saying Congress wasted an opportunity to merge the two agencies with the Dodd-Frank Act.
Barrett Morris | Email
Coinbase Expands Crypto Derivatives Offerings and SEC Lawsuit Nears Dismissal
On February 21, the SEC announced the dismissal of its lawsuit against Coinbase, pending final judicial approval. The lawsuit, filed in 2023, accused Coinbase of operating as an unregistered securities exchange. The SEC’s statement on the dismissal notes the formation of the Crypto Task Force and the SEC’s “decision to exercise its discretion and dismiss this pending enforcement action rests on its judgement that the dismissal will facilitate the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry, not on any assessment of the merits of the claims alleged in the action.”
The dismissal of this lawsuit could have far-reaching implications for the cryptocurrency industry and signals a shift in both the SEC’s approach to enforcement and renewing efforts to establish clearer regulatory frameworks for digital assets through the work of its Crypto Task Force.
Yiran Jiang | Email
Trump Administration Approach to Merger Reviews
Not necessarily swaps related, but something we found interesting. With the change in administration, many have questioned whether the FTC, DOJ, and banking agencies may revert back to pre-2023 guidelines for merger reviews. The updates to policies regarding merger reviews by the FTC and DOJ in 2023 (the “Merger Guidelines”), the DOJ’s subsequent release of banking specific guidance in 2024, and the OCC’s and FDIC’s updated policy for reviewing applications under the Bank Merger Act in 2024, all resulted in a more rigorous review by the agencies (and also the sense that there was potential disconnect between the agencies in terms of how to approach the reviews, but that’s a different topic). However, current FTC Chair Andrew Ferguson issued a letter to FTC staff on February 18, 2025 stating that, at least for now, the 2023 Merger Guidelines are still the appropriate framework for FTC staff reviewing merger filings. He reasoned that “the clear lesson of history is that we should prize stability and disfavor wholesale recission”. For proponents of the 2023 and 2024 merger review updates, this was a welcome sign and indicated that the FTC was not abandoning the more rigorous framework established by the prior administration (although how it will be applied in practice by the current administration remains to be seen).
John Lightbourne, Barrett Morris | Email
Mailbag
And lastly, we enjoyed the note from a reader below, which recognized the CFTC press team’s deference to journalistic norms by distinguishing “Florida Man” from “New York Resident”. If “Florida Man” is new to you, please enjoy this 54-page Florida State law review article detailing the cultural phenomenon of “Florida Man”.
Anonymous Reader
Interesting Links
SEC Extends Compliance Dates for Compliance Date for US Treasury Clearing Rule
ISDA/IIF Public Comment on Basel Committee’s Technical Amendment – Hedging of counterparty credit risk exposures
ISDA Response to FCA Discussion Paper on UK MIFID Transaction Reporting
Odd Lots Podcast – This is How Derivatives Trading Swallowed the Entire Market
CFTC Announces Prediction Markets Roundtable
IOSCO Thematic Review on Technological Challenges to Effective Market Surveillance
ISDA OTC Derivatives Compliance Calendar
Places We’ll Be
SIFMA C&L Annual Seminar – March 23-26
FIA Law & Compliance Division Conference – April 23-25
(Don’t hesitate to reach out if you would like to connect!)
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