How the Shortage of Senior Officials at the SEC Could Facilitate Cryptocurrency Regulation?

After U.S. lawmakers failed to pass a comprehensive bill for the structure of digital asset markets, financial regulatory bodies have intensified their efforts to change the laws related to oversight and enforcement of regulations on companies and cryptocurrency offerings.

However, the two main regulatory bodies, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), are facing a shortage of leadership and management. This situation has resulted in decision-making for regulating various aspects of the $3 trillion cryptocurrency market largely resting in the hands of just three individuals, two of whom were appointed by Donald Trump, the former President of the United States.

At the SEC, following the resignation of Hester Peirce earlier this month, only two commissioners remain: Paul Atkins, the chair of the commission, and Mark Uyeda, the former acting chair. The leadership shortage at the CFTC is even more severe, with Michael Selig serving as the only confirmed chair and commissioner by the Senate since December 2025. Meanwhile, the structure of each of these two agencies is designed to have five commissioners.

Both agencies have proposed new regulations that seem to aim to replace congressional legislation in the area of cryptocurrency market regulation.

In August, the SEC proposed rules to provide companies with a legal safe harbor, under which tokens would not be considered "investment contracts." Following this, the CFTC also took a similar path in October, with Selig announcing that the agency would use its "existing legal authority" to address cryptocurrency regulations through proposed rules related to exchanges. Atkins also added on October 2 that "more regulatory proposals" for the crypto space are on the way.

Could a Single SEC Commissioner Have the Final Say on Cryptocurrency Laws?

On September 30, despite the shortage of commissioners, the SEC further streamlined legal pathways. The agency released a final version of a law that took effect on October 2. According to the SEC, this regulation amended the quorum requirements to "increase flexibility and certainty in the agency's legislations." Under this new law, if only two commissioners are present, in many cases, the number of individuals required to meet the quorum for meetings is reduced to just one person.

Robin Wigglesworth wrote in a note published on October 5 in the Financial Times:

Now that there are only two commissioners present, and it is entirely possible that one of them may have to recuse themselves from a case (or be absent for any reason), the presence of just one person is sufficient to pass an official law that applies to the vast multi-trillion-dollar U.S. securities markets.

Mark Uyeda reacted to this in another note in the Financial Times on Sunday, claiming that "the SEC's commitment to its mission remains unchanged"; even though the agency has only two commissioners and Trump has yet to nominate new candidates to fill the vacant seats. The policymaker stated that the change in the aforementioned law merely clarifies that if all commissioners except one are disqualified from addressing a matter, the commission can still meet the necessary quorum.

Uyeda further stated:

The implication that the SEC is "hastily revising its quorum law" so that the remaining commissioners can "act however they want" may create an intriguing comparison to dystopian regimes, but it misleads readers about the main reason for revising the quorum law and why this is beneficial for the market.

As of Tuesday, the White House had not nominated any new candidates for the SEC and CFTC; a situation that potentially places the legislative process in each of these agencies in the hands of just one person for months (or even longer). Congress still has time to vote on the market structure bill that is at the center of these discussions, namely the Digital Asset Market Transparency Act (known as the CLARITY Act); however, some experts doubt that lawmakers will advance this bill during the transitional period (Lame Duck Session) between the 2026 midterm elections and the swearing-in of the new Congress in January.

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