Washington’s representative hopes the Commodity Futures Trade Commission (CFTC) regulates cryptocurrencies, but questions about whether the agency should perform its mandate.
Last week, U.S. Congressman Hill France issued The first draft of the Clarity Act, which will create a new category of assets, namely “digital goods.” It will allow qualified assets to be traded relatively freely in the secondary market. This will also give the CFTC most of the permissions to regulate cryptocurrencies.
The CFTC is authorized and governed by the Commodity Exchange Act (CEA) (CEA), a sprawling law that regularly revises new legislation to amend and modernize it. Like the Securities and Exchange Commission and many other federal commissions, the CFTC includes five commissioners, each of which must be confirmed by the Senate.
Currently, one of the chairs is empty and the other commissioners will leave the agency in the near future. If the Clarity Act is passed, this could hinder the CFTC’s ability to effectively regulate the cryptocurrency industry.
CFTC’s ability to serve as a nomination booth in Crypto Limited
According to the General Assembly, when the presidential government changes, especially when the government changes parties, the CFTC president resigns to allow the president to appoint a new president. It is worth noting that the provisions of the CEA shall not exceed three political parties.
When Donald Trump took office in January 2025, former Democratic chairman Rostin Behnam resigned from his seat. Considering a candidate to replace former chairman Benham some time later, Trump nominated a replacement in February: former commissioner, A16Z Crypto policy director and Kalshi board member Brian Quintenz.
Then nothing happened. For months, Quintendz’s nomination was in trouble and unthinkable. This is not uncommon because the Senate may occupy other high-priority legislation, such as Trump’s budget bill and the Genius Stabulcaine Act.
This means that since Benham left in January, the committee has been in a deadlock with two Democrats and two Republican commissioners. This does not mean that CFTC’s business has stopped. Some functions of the so-called independent agency are located in the chairperson’s office, and Caroline Pham has been chairman since Trump joined.
But some features do not. These include issuance or amendment of regulations, policy statements, exemptions or no standards of conduct. All of this requires a majority vote of the Commissioner, and in such cases where regulations are disputed, it would be impossible in the case of even splitting of the CFTC. Law enforcement is also restricted as law enforcement requires new actions “to the majority of committee approval.”
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So far, the cryptocurrency industry is good at it. One of the industry’s most important complaints to the administration of former President Joe Biden is that it engages in “law enforcement regulation.” By stopping adopting the law enforcement or regulatory agenda, the CFTC has addressed the issue.
The most notable example is the forecast market industry. Under the Commodity Trading Act, the legal forecasting market is managed as an “event contract”. Historically, the CFTC banned these contracts from involving highly significant categories such as elections, awards and sports, but in late 2024, forecast market platform Kalshi won a landmark legal battle with the then-Benham-led CFTC allowing the electoral market.
After Trump won the 2024 election, space continues to develop as aggressive entrants boundaries are boundaries. Crypto.com self-certified the Super Bowl’s own forecast market in December, while Biden CFTC moved to stop it. However, after Trump took office, the new CFTC allowed the market by default, effectively creating new markets for federally regulated sports betting.
In some cases, Democratic Commissioners may choose to work with Republicans, just as Democrat Christy Goldsmith Romero voted to reject CFTC’s appeal against Kalshi’s 2024 election forecasting market victory.
However, the Commission cannot take action to the extent of real differences. This problem may become dramatic in the near future.
Other CFTC specialists are resigning
Quintendz’s nomination hearing on the Senate Committee on Agriculture, Nutrition and Forestry is scheduled to take place on June 10, but others are also withdrawing as he crosses the door.
Two of the remaining four CFTC commissioners, Republican Summer Messinger and Democratic Goldsmith Romero, left the committee last week. While this won’t change the committee’s deadlock math, it does show that the deadlock can be difficult to break. That’s because the remaining Republican Commissioner Pham also said she would leave if Quintenz was sworn in.
Furthermore, there seems to be no plan to make up for this lack of capacity. No other commissioner announced, nor any reports suggest that there is even a list under consideration.
The Trump administration may have to watch for a long time, as the remaining Democratic Commissioner Kristin Johnson also announced her departure, although there is no deadline (her term continues until 2027). Assuming they could join Quintenz, they might just be able to wait for Johnson and retain a single control over the ostensible five-member committee.
This will be strictly legal because CEA Article 2(a)(3) nation “The vacancy of the Commission will not undermine the rights of the remaining Commissioners to exercise all powers of the Commission.”
But its legitimacy means it is a good idea?
Gambling industry delays are a warning sign
February 5, CFTC Announce The roundtable “within about 45 days” discusses sports betting related to the federal registration forecast market. The CFTC will listen to comments for months and then bring everyone together and let them talk.
It turned out to be very needed because shortly thereafter, the vortex came on the industry as Nevada, New Jersey, Maryland and many other states searched the federally registered forecast market in federal courts Carlsey.
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As these cases penetrate, it is clear that the choice that allows these new markets will ultimately depend on the CFTC. However, as industry observers turned their attention to the committee, there was no decision.
With the calculation of the 45-day time limit, members of the gambling industry are frankly waiting for the announced roundtable waiting. Behind the scenes, the CFTC set an April 30 date, but publicly, the agency didn’t mean much about the matter until a week before the event started, they canceled it.
This should be a canary moment for those seeking to designate the CFTC as a central regulator for the entire cryptocurrency industry. The entire industry (federal normative sports betting) is waiting for a regulator to weigh in and nothing happens when needed.
This is not a prosecution against the CFTC, but it may reflect a lack of capacity. The agency suddenly caught the attention of the moment when its commissioners had planned exports and the government’s plans for its future were far from clear.
Maybe Quintenz will solve this problem, but can the cryptocurrency industry really bet on the whole future?
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