The dilemma of US cryptocurrency regulation: policies are advancing, but CFTC workforce shrinks by 21.5%

The Office of the Chief Economist of the U.S. Commodity Futures Trading Commission (CFTC) released a report on Tuesday revealing a stark contradiction: Congress is pushing the ###Digital Asset Market Clarity Act### to expand CFTC’s regulatory authority, but the agency itself is experiencing a severe manpower crisis. According to the report, the number of full-time staff at the CFTC has decreased from approximately 708 at the end of FY2024 to about 556 now, a decline of 21.5%. In this context, whether the CFTC can effectively handle the expanded regulatory responsibilities becomes a pressing issue.

Severity of the Manpower Crisis

Sharp decline in staff numbers

According to the CFTC Chief Economist’s report, this critical regulatory body is undergoing a large-scale personnel exodus.

This is not just a numerical change. In a regulatory field that requires high levels of expertise, losing one-fifth of the workforce means what? It means a smaller team reviewing transactions, potentially slower responses to market anomalies, and diminished ability to identify emerging risks.

( CFTC Chief Economist’s Candid Warning

The CFTC Chief Economist explicitly states in the report that to fulfill its expanded functions, the agency needs investments in three areas: hiring more staff, building technical expertise, and developing new data systems. All three require time and resources. Vincent Liu, Chief Investment Officer at Kronos Research, also pointed out that the current responsibilities and resource framework of the CFTC are not designed for decentralized spot markets; effective regulation requires targeted legal expansion and a hybrid framework.

Positive Policy Developments

) Official modernization plan

Meanwhile, CFTC Chair Michael Selig announced on January 20th the launch of the “Future Proof”###未来证明### plan, aimed at modernizing the CFTC’s approach to digital asset regulation. Selig stated that if Congress passes legislation to expand the CFTC’s regulatory authority, the agency is ready to take over regulation of the digital asset markets. He also appointed seasoned crypto lawyer Michael Passalacqua as senior advisor, who has extensive experience in cryptocurrency and blockchain litigation.

These measures demonstrate the leadership’s commitment to modernizing crypto regulation. But the question remains: can this resolve be effectively implemented under the constraints of manpower and resources?

( Legislative momentum

According to the latest news, Congress is close to passing the )Digital Asset Market Clarity Act(. The core of this legislation is reallocating regulatory authority—reducing the SEC’s role in token regulation and bringing most tokens under CFTC jurisdiction. This is good news for market clarity but bad news for the CFTC’s pressure.

Systemic Regulatory Dilemma

) Not just a CFTC issue

It’s important to note that the CFTC’s predicament is not isolated. Bloomberg comments that the entire U.S. crypto regulatory system faces similar resource shortages:

• The SEC’s budget is more than six times that of the CFTC, yet the CFTC is taking on increasing responsibilities for token regulation
• The Office of the Comptroller of the Currency ###OCC has experienced layoffs and cybersecurity incidents, limiting enforcement capabilities
• The Consumer Financial Protection Bureau CFPB has had its functions significantly cut, reducing consumer protection capacity

This creates a systemic dilemma: regulatory responsibilities are dispersed, but enforcement resources are shrinking.

Potential Risks

Bloomberg editorial warns that pushing crypto assets into broader public and institutional investment without sufficient regulatory capacity may trigger a trust crisis. If fraud and illegal activities continue to surface, market confidence and industry development could be adversely affected.

Key Questions for the Future

Based on current circumstances, several key issues warrant ongoing attention:

• Will Congress provide corresponding budget increases as it advances legislation?
• Can the CFTC reverse the decline in manpower through the “Future Proof” plan and new talent recruitment?
• How long will this “legislative expansion without sufficient resources” situation persist?

Summary

U.S. crypto regulation is at a delicate juncture. On one hand, policymakers are pushing for clearer legal frameworks, which is beneficial for market standardization. On the other hand, the agencies responsible for enforcement are facing a manpower crisis—CFTC has lost 21.5% of its staff in a year while preparing to take on more regulatory responsibilities. This “ambition versus reality mismatch” could pose risks to future market stability.

The key is whether the pace of policy advancement can keep up with resource allocation. If this gap persists, even with clearer legal frameworks, regulatory effectiveness will be significantly compromised. This not only affects market order but also investor confidence and the long-term development of the industry.