SEC's Reduced Leadership May Enable Streamlined Cryptocurrency Regulation
Recent modifications to the SEC's quorum requirements may streamline the agency's ability to reshape cryptocurrency oversight even without congressional legislation on market structure.
Following the failure of US Congress to enact comprehensive legislation addressing digital asset market structure, financial oversight bodies have intensified their initiatives to modify regulations governing the supervision and enforcement of cryptocurrency firms and products.
Yet, the nation's two principal regulatory authorities, namely the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), face significant leadership vacancies at senior levels. This situation has concentrated decision-making authority for regulating portions of the $3 trillion cryptocurrency marketplace in the hands of merely three officials, with two having been appointed by US President Donald Trump.
Within the SEC, just two commissioners now serve — Chair Paul Atkins along with former Acting Chair Mark Uyeda — after Commissioner Hester Peirce's exit earlier this month. The leadership shortage at the CFTC presents an even more dramatic situation, where Michael Selig stands as the sole Senate-confirmed chair and commissioner beginning December 2025. Each regulatory body is designed to operate with five commissioners.
Both regulatory entities have put forward rules that seemingly attempt to substitute for congressional legislation in the governance of cryptocurrencies.
The SEC introduced rules in August designed to grant companies safe harbor protection from tokens being classified as "investment contracts," while the CFTC released similar proposals in October. Selig indicated the agency would leverage its "existing statutory authorities" to tackle crypto oversight through proposed exchange regulations. On Oct. 2, Atkins noted that "more regulatory proposals [were] on the horizon" concerning crypto.
Could one SEC commissioner have the final say on crypto rules?
The SEC made these regulatory pathways even more accessible given its leadership shortage on Sept. 30. The regulatory body issued a final rule effective Oct. 2 that modified quorum requirements for what it described as "promot[ing] flexibility and finality of agency rulemaking." This rule diminishes the commissioner count needed for a quorum to a single individual when only two are present in numerous situations.
[...] with now just two commissioners around and it being entirely possible that one of them might have to recuse themselves from an issue (or be otherwise MIA), just one is now enough to pass a formal rule that applies to America's vast multitrillion-dollar securities markets.
Robin Wigglesworth, Financial Times
In his own Financial Times op-ed published Sunday, Uyeda countered these concerns, asserting that the SEC's "commitment to its mission remains unchanged" notwithstanding the presence of only two commissioners and Trump's silence regarding additional nominations to occupy the vacant positions. The official explained that the rule modification "clarifies that the Commission can establish a quorum if all but one commissioner is disqualified from a matter."
Suggesting that the SEC is 'hastily revamp[ing]' its quorum rule so that the remaining commissioners can 'have their way' makes for a colourful comparison to fictional dystopian regimes but misleads readers about why the Commission revised its quorum rule and why it's for the better.
Mark Uyeda, SEC Commissioner
Through Tuesday, the White House had made no announcements regarding nominations for either the SEC or CFTC, which could leave the regulatory rulemaking authority concentrated in a single individual at each institution for several months, potentially extending even longer. Legislative bodies retain the opportunity to cast votes on the market structure legislation at the heart of this debate, specifically the Digital Asset Market Clarity (CLARITY) Act. However, certain specialists remain skeptical that lawmakers will push the legislation forward during a lame duck session occurring between the 2026 midterm elections and the January swearing-in of the subsequent congressional session.