How SEC leadership vacuum could ease digital asset rules

A recent change to SEC quorum rules could make it easier for the agency to revise its approach to digital asset regulation in the absence of a market structure bill.

A recent change in SEC rules regarding quorums could make it easier for the agency to modify its approach to cryptocurrency regulation in the absence of a market structure bill.

After US lawmakers failed to pass a comprehensive bill to structure the market for digital assets, financial regulators stepped up efforts to change rules surrounding the oversight and enforcement of crypto companies and offerings.

However, the two main regulators, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), are understaffed at the leadership level, and decisions about regulating aspects of the $3 trillion cryptocurrency market are largely in the hands of just three people, two of whom have been nominated by US President Donald Trump.

At the SEC, two commissioners — Chairman Paul Atkins and former Acting Chairman Mark Ovida — remain after Commissioner Hester Pierce left earlier this month. The lack of leadership at the CFTC is even more acute, with Michael Selig serving as the only chairman and Senate-confirmed commissioner through December 2025. It is intended that these agencies will have five commissioners each.

Both agencies have proposed legislation that appears to be trying to take the place of congressional legislation in regulating cryptocurrencies.

The SEC proposed rules in August to offer companies a safe haven from tokens that are considered "investment contracts," and the CFTC followed suit in October, with Selig saying the agency will use "existing regulatory authorities" to address crypto regulation through proposed rules on exchanges. Atkins added on Oct. 2 that "more regulatory proposals [are on the horizon]." It's in hand for cryptos.

On September 30, the Securities and Exchange Commission eased these regulatory avenues with fewer commissions. The agency released a final rule that took effect on Oct. 2 that it said revised the quorum requirements to "promote flexibility and finality in the agency's rulemaking." This law reduces the number of commissioners required for a quorum to one, when in many cases only two are present.

In an October 5 article for the Financial Times, Robin Wigglesworth wrote: “[…] with only two commissioners around and it’s entirely possible that one of them would have to recuse himself from an issue (or otherwise be MIA), now only one is enough to pass a formal rule that applies to America’s vast multi-trillion dollar securities markets.

Ovida responded in an op-ed in the Financial Times on Sunday, claiming the SEC's "commitment to its mission remains unchanged" despite only having two commissioners and no announcements by Trump about additional nominees to fill the vacant seats. The law change "clarifies that the commission can establish a quorum if all but one commissioner is disqualified from an issue," the policymaker said.

"The suggestion that the SEC is hastily re[editing] its quorum rule so that the remaining commissions can 'choose their own way' makes for a colorful decision," Aveda said. Compared to fictional dystopian regimes, it misleads readers as to why the commission revised its quorum rule and why it is for the better.

As of Tuesday, the White House had not announced any nominees for the SEC and CFTC, likely leaving the rulemaking process in the hands of just one person at each agency for months, if not longer. Congress still has time to vote on the market structure bill at the center of the debate, the Digital Asset Market Transparency (CLARITY) Act, but some experts don't see lawmakers advancing the legislation in one session between the 2026 midterm elections and when the next session is sworn in in January.