The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)—two federal agencies that hold sweeping regulatory and enforcement authority over crypto assets—will both face a “staffing shortage” after this Friday. After SEC Commissioner Hester Peirce leaves on October 2, the agency will operate with only two commissioners, for the second time in U.S. history; CFTC Chair Michael Selig has been the sole backstop since the end of 2025. Together, the two agencies have seven commissioner seats vacant, meaning that for an approximately $3 trillion crypto industry, the direction of U.S. oversight will be determined by just the remaining three commissioners.
The timing of this personnel vacuum is especially sensitive. On September 15, the (Digital Assets Market Clarity Act) (CLARITY Act), which the industry had high hopes for, failed to secure the 60 votes needed to advance the legislation. It fell short when a Republican-controlled Senate voted 49 to 50, coming just before the procedural vote threshold. After the congressional legislative route was blocked, the SEC and CFTC had to pivot to defining the boundaries for crypto through administrative rulemaking under their existing statutory authority. When rules—not laws—become the primary regulatory force, policy durability decreases and partisan coloring increases, while the speed of rulemaking may actually accelerate. For project teams, exchanges, and institutional investors, this is a variable that needs to be re-priced.
Two-person SEC and one-person CFTC: a regulatory vacuum rarely seen in history
Peirce spent eight years at the SEC and was dubbed “Crypto Mom” by the industry for her long-standing advocacy of establishing clear rules for crypto assets. Her departure was about two months away from the end of the 18-month extension of her second term. After that, the SEC will have only two Republicans left—Chair Paul Atkins and Commissioner Mark Uyeda. Even though Uyeda was nominated by Biden in 2022, his party affiliation is Republican—so the five-member bipartisan configuration has three seats vacant.
Under the (Securities Exchange Act), the SEC should be composed of five commissioners, and no more than three may come from the same political party to ensure bipartisan checks and balances. But the law does not require all five seats to be filled. The timing of presidential nominations and Senate confirmations often determines the actual number of commissioners in office. Under the SEC’s quorum rules adopted in 1995, the commission typically needs three commissioners to constitute a quorum and conduct formal business. However, if fewer than three commissioners are in office, then the number of commissioners in office itself constitutes a quorum. This mechanism, known as the “two-person rule” (Rule of 2), was used during the Clinton administration and again during the early 2017 power transition period, allowing the SEC to handle day-to-day matters and rulemaking even amid staffing shortages.
But this also implies two layers of constraint: first, any major decision requires agreement between two commissioners, and if a disagreement arises, an effective resolution cannot be formed; second, the commission loses the check-and-balance voice of Democratic commissioners, so the partisan leanings of the remaining commissioners will directly determine the regulatory direction. Historically, when the SEC was in a two-person state, it postponed a number of major enforcement and rulemaking actions until new commissioners took office.
The CFTC situation is even more extreme. After the departure of acting chair Caroline Pham in December 2025, Chair Michael Selig has remained the only Senate-confirmed commissioner at the agency. By design, the CFTC is also a five-member commission, and the current state is that four seats are vacant. The White House has not announced any new nominations yet, only saying that President Trump intends to nominate two members of the two agencies “in the near future.” On September 4, CNBC reported that the White House has been screening candidates for four CFTC commissioner slots but has not disclosed names.
With only one confirmed commissioner remaining, CFTC rulemaking faces even fewer constraints. Former CFTC Democratic chair Timothy Massad told the media that Selig does not need to win votes from other commissioners to move the agenda forward, reflecting increased politicization of the agency—“not a good trend.” In fact, the 12-month “Crypto Sprint” initiated during Pham’s tenure has already advanced rulemaking for blockchain applications ranging from getting spot crypto trading listed to tokenized collateral and stablecoin-related and derivatives market infrastructure. After Selig took over, he continued this approach. The efficiency advantage of a one-person commission is increasingly becoming the main tool for the Trump administration to work around the legislative deadlock.
After legislative failure, regulation shifts from Congress to administrative rules
The CLARITY Act was originally seen by the industry as the key legislation to resolve the dispute over SEC versus CFTC jurisdiction, and it was expected to shift more regulatory authority for digital assets to the CFTC. The bill went through more than a year of bipartisan negotiations in the Senate Banking Committee, and the House passed it as early as July 2025 by a vote of 294 to 134. But in the procedural vote on September 15, Republican Senators Susan Collins, Josh Hawley, and Jerry Moran, together with Democrats, cast votes against the bill, and it ultimately failed. Multiple analyses suggest that what blocked the bill was not technical details about securities law, but moral controversy surrounding a sitting president’s digital-asset holdings, as well as community banks’ opposition to stablecoin provisions.
After legislative failure, the two major agencies quickly shifted to an administrative route. Both SEC Chair Paul Atkins and CFTC Chair Michael Selig said they will continue to advance crypto rules under their existing statutory authority. This shift was already laid out in advance: on March 17, the SEC and CFTC jointly issued an interpretive document establishing a token classification framework, clarifying that most crypto assets are not securities—while also noting that non-securities tokens may still constitute investment contracts under certain conditions and thus be subject to securities laws. In September, days after the CLARITY Act vote failed, the SEC followed up with CFTC guidance for employees, providing practical interpretations of how federal securities laws apply to scenarios such as token issuances, staking instruments, and network services.
For the industry, the rulemaking path is a double-edged sword. The advantage of administrative rules is flexibility and speed—especially when the commission is short-staffed, a chair-led agenda is more likely to be implemented. But the cost is insufficient durability: administrative rules can be rapidly modified or withdrawn by the next commission, and only congressional legislation can provide stable institutional expectations. For institutions that need long-term capital allocation and compliance investment, this uncertainty itself is a cost.
The deeper problem is that the boundaries of jurisdiction have still not been codified in law. The core value of the CLARITY Act was to define the division of responsibilities between the SEC and the CFTC through legislation, reducing regulatory arbitrage and the gray area of overlapping standards. After the bill failed, the two agencies could only “negotiate” boundaries through joint guidance and case-by-case enforcement. The stability of such boundaries depends on the tacit understanding between the two chairs—not on statutory text. Once personnel or political winds change, the compliance certainty that projects previously received could be shaken.
Partisan imbalance and the subsequent watchpoints
Another concern created by the personnel vacuum is the lack of bipartisan checks and balances. The remaining two SEC commissioners are both Republicans, and the CFTC is led by only one person—the chair nominated by Trump. In a June letter to Trump and to Senate Majority Leader John Thune, the Senate Democrats were blunt that the Trump administration appears intent on fully controlling these agencies and is not interested in working in good faith with Congress. For the crypto industry, a friendly regulatory environment is beneficial in the short term for innovation and capital inflows. But without a regulatory framework built on bipartisan consensus, long-term stability depends on whether the political cycle continues.
Three variables need to be watched next: first, when will the White House formally nominate candidates to fill the vacancies, and can the nominees be confirmed smoothly by the Senate? If the Senate’s two parties have close numbers, the confirmation process could fall back into another standoff. Second, under existing authorities, what specific rules will the SEC and CFTC still roll out—especially sensitive areas such as token classification, stablecoins, and prediction markets. Third, before the 120th Congress convenes, will the industry push for narrower-scope independent legislation to bypass the overall deadlock created by the CLARITY Act?
For crypto markets, regulatory boundaries are becoming calculable—but there are fewer and fewer people making those boundaries. During the window created by legislative absence, every rule action by three commissioners could be amplified by the market into a policy signal. While the industry welcomes a regulator-friendly approach, it also needs to prepare for the rules’ lack of durability.