Congress wants to hand the keys to crypto regulation to an agency that just lost a fifth of its workforce. The CLARITY Act, formally known as the Digital Asset Market Clarity Act of 2025, would designate most crypto assets as “digital commodities” and place primary oversight of spot and cash markets under the Commodity Futures Trading Commission. The problem, according to a growing chorus of critics, is that the CFTC may not have the resources to actually do the job.
Brookings fellow Tonantzin Carmona has been among the most vocal skeptics, arguing that the legislation risks creating a regulatory framework on paper that falls apart in practice.
An agency stretched thin
The CFTC’s workforce dropped from 708 to 556 full-time equivalents by the end of fiscal year 2025, a 21% reduction. That’s not a minor trim. That’s the equivalent of losing one out of every five employees right before being asked to take on the most significant expansion of the agency’s mandate in its history.
The budget gap between the two main financial regulators tells the story even more clearly. The CFTC operates on roughly $365 million for FY2026. The SEC, by comparison, works with approximately $2.1 billion. That’s nearly a six-to-one spending advantage for the SEC, which would actually be shedding crypto responsibilities under the new framework.
Carmona’s argument boils down to a straightforward concern: the CLARITY Act would impose requirements comparable in scope to the Dodd-Frank Act on an agency that simply lacks the staff and funding to carry them out.
What the bill actually does
The CLARITY Act, designated H.R. 3633, passed the House of Representatives in July 2025. The Senate Banking Committee marked it up in May 2026, moving it closer to becoming law. Its central premise is resolving the jurisdictional tug-of-war between the CFTC and the SEC that has defined crypto regulation for years.
Under the bill, the CFTC would gain exclusive jurisdiction over spot transactions in digital commodities. Exchanges, brokers, dealers, and custodians dealing in these assets would need to register with the agency. The legislation sets a 270-day effective date for registration requirements and gives regulators a 360-day deadline to finalize rulemaking.
On March 17, 2026, the SEC and CFTC issued joint interpretive guidance that began establishing this new taxonomy. The guidance classified specific assets, including Bitcoin, Ether, Solana, and XRP, as digital commodities. That classification matters because it determines which agency oversees trading in those assets and which set of rules applies.
The resource problem nobody wants to solve
The CFTC has historically overseen derivatives markets, futures, swaps, and options. These are sophisticated instruments traded primarily by institutional players. Spot crypto markets are a different animal entirely. They involve millions of retail participants, many of whom are first-time investors with limited understanding of market mechanics. The consumer protection apparatus required to oversee retail-heavy markets is fundamentally different from what the CFTC has built over decades.
The SEC has extensive experience with retail investor protection. It operates a well-staffed enforcement division, runs investor education programs, and processes millions of disclosures annually. Shifting crypto oversight away from the SEC means those institutional capabilities don’t automatically transfer to the CFTC.
What this means for investors
The 360-day rulemaking deadline built into the legislation creates a significant pressure point. The CFTC would need to write comprehensive rules for an entirely new category of market participants, covering everything from exchange registration to custody requirements to market surveillance, all within a year. For an agency operating on $365 million with 556 staff members, it amounts to a sprint with ankle weights.
Investors should pay close attention to the Senate’s treatment of the bill and, critically, to any accompanying appropriations language. The CLARITY Act without a corresponding funding increase is a framework built on hope rather than infrastructure.