Brookings scholar warns of CLARITY Act risks: US CFTC could face an absence of substantive regulatory powers

Odaily reported that Aaron Klein, a scholar at the Brookings Institution in the United States, has issued a warning that as Congress reviews digital asset legislation, the Commodity Futures Trading Commission (CFTC) may encounter issues regarding insufficient regulatory capacity as it seeks to expand its oversight of digital assets. Aaron Klein pointed out that the CFTC was originally established to regulate the commodity futures markets and was not designed for the scale of responsibilities proposed under the current crypto regulations. A lack of additional personnel, funding, and expertise could result in a situation where the agency has regulatory authority but lacks effective supervision. The recent loss of staff and organizational adjustments at the CFTC have weakened its regulatory capacity, and expanded responsibilities could lead to a recurrence of regulatory failures seen during past financial crises. If crypto oversight responsibilities are spread across multiple agencies, it could create delays and confusion, repeating the execution shortcomings witnessed during the Dodd-Frank era.

Aaron Klein criticized accusations that financial regulation is influenced by politics, emphasizing that enforcement should be independent from the White House or any political figures. He called for greater accountability and measures to prevent financial misconduct. Klein suggested that the SEC and CFTC should enhance coordination and possibly even merge to improve regulatory efficiency for digital assets and prediction markets. In the short term, sharing office space could facilitate collaboration better than mere formal agreements. (CoinDesk)