The U.S. House is back in session this Monday, August 31, while the Senate will return after Labor Day on September 14. First order of business will be a Senate cloture vote the next day.
While most of the attention has been on the long, drawn out fight over a compromise on yield and the tug of war over more rigorous ethic measures from the White House, the vacancies at two regulatory agencies is also a major sticking point.
At the heart of market structure legislation is the process for determining when a digital asset is a security or a commodity. That’s why agriculture committees in both chambers have had the pen on drafting the landmark legislation, alongside the financial and banking committees.
Yet, the corresponding regulatory bodies are down key members of leadership and have no Democrats in their ranks.
The Securities and Exchange Commission is about to become a commission of two when Commissioner Hester Peirce retires in November, leaving only Chairman Paul Atkins and Commissioner Mark Uyeda.
Since last December, the Commodity Futures Trading Commission has operated as a one-man federal entity, with Chairman Michael Selig at the helm.
Sole CFTC Commissioner Goes Before House Agriculture Committee
The CFTC’s oversight of digital assets includes ETFs, perpetuals, prediction markets, among other instruments. If enacted, the Clarity Act would expand the authority of the agency.
Earlier this year, Chairman Selig testified before the House Agriculture Committee, where Members raised concerns about the deep vacancies.
Congresswoman Alma S. Adams, Ph.D. (NC-12) had this to say following the Chair’s testimony.
“I am deeply concerned that Chairman Selig has indicated a willingness to advance major new regulations without a full complement of commissioners in place. Rulemaking of this magnitude requires the full deliberative process the agency was designed to carry out — not unilateral action by a single sitting commissioner.”
Efforts to install a bipartisan slate has been stalled, as White House officials and Senator Chuck Schumer (D-NY) exchanged jabs and pointed blame.
Last month, Schumer sent two Democratic nominees for the SEC and CFTC respectively to the White House, but his office has not disclosed their names.
Given the partisan Senate standoff over the Clarity Act, having five sitting commissioners appointed from both sides of the aisle at the SEC and CFTC may help ease the tense negotiations.
Statute’s Bipartisan Mandate
Both agencies have a bipartisan mandate and headcount requirement.
CFTC is to consist of “five Commissioners appointed by the President, with the advice and consent of the Senate, to serve staggered five-year terms. The President, with the consent of the Senate, designates one of the Commissioners to serve as Chairman. No more than three Commissioners at any one time may be from the same political party.”
The SEC is to include “five Commissioners who are appointed by the President of the United States with the advice and consent of the Senate. Terms last five years and are staggered so that one Commissioner's term ends on June 5 of each year. The Chairman and Commissioners may continue to serve up to approximately 18 months after terms expire if they are not replaced before then. To ensure that the Commission remains non-partisan, no more than three Commissioners may belong to the same political party. The President also designates one of the Commissioners as Chairman, the SEC's top executive.”
Uncertain Future For Crypto Clarity Vote
Executives from the crypto industry have expressed optimism that if the upcoming cloture vote fails, regulatory bodies can step in with much needed rules. Still, some wonder if that’s actionable with such a severe leadership vacuum. Particularly if the goal is a durable, comprehensive policy and regulatory framework to fuel growth in the United States.
Interestingly, the significance of the vacancies, along with the other outstanding issues, to the crypto legislative process may illustrate just how complex it will be for a bill to become law going forward. The fate of Clarity could serve as a timely best practice case or an insightful autopsy.