Fellow Says Clarity Act Would Expand CFTC Mandate Without Added Resources

A Brookings fellow said legislation under consideration in Congress would give the Commodity Futures Trading Commission oversight of digital asset markets. The fellow stated that the agency was created to regulate commodity futures and was not structured for the volume of responsibilities the proposed Clarity Act would assign.

The fellow warned that assigning new duties without additional staff, funding, and expertise could result in regulation that exists on paper but lacks effective enforcement. Personnel departures and structural changes at the agency have already reduced regulatory capacity, the fellow said.

The fellow cited the Dodd-Frank period as an example where responsibilities spread across multiple regulators produced delays and confusion. Fragmented oversight without sufficient resources risks repeating shortcomings that contributed to earlier financial crises, the fellow added.

The fellow criticized reports suggesting political influence affects enforcement decisions and said regulators should remain independent from the White House or political figures. The fellow described the current environment as unusually permissive toward financial misconduct and called for stronger accountability.

Physical co-location of agency staff could improve day-to-day cooperation more than formal agreements, the fellow noted. Memorandums of understanding between regulators have often failed to produce meaningful collaboration, the fellow concluded.