U.S. Cryptocurrency Regulation Dilemma: Market Risks Amid Dispersed Power and Resource Constraints

【CoinDesk】The US Congress is working on establishing a legal framework for digital assets, which is a good idea—encouraging innovation while plugging loopholes. But the problem is, the regulatory agencies responsible for enforcement have long been hollowed out.

Let’s start with the “Genius Act,” a bill to regulate stablecoins. It looks comprehensive on the surface, but in reality, responsibilities are scattered in seven or eight directions. The Office of the Comptroller of the Currency (OCC), a key agency, has recently undergone large-scale layoffs and cyberattacks, leaving it severely weakened. Relying on it to oversee stablecoin issuance? That’s basically wishful thinking.

Next, the “Clarity Act” proposes to assign most tokens to be regulated by the Commodity Futures Trading Commission (CFTC). It sounds like a clear division of responsibilities. But there’s a critical problem—CFTC’s budget is only one-sixth of the Securities and Exchange Commission (SEC), and it is severely understaffed, with limited enforcement capacity. Using an under-resourced agency to regulate the largest market? That logic doesn’t hold.

There’s an even more painful issue: the Consumer Financial Protection Bureau (CFPB) has been almost dismantled, and the department that handled crypto complaints is now virtually non-existent. This means there’s one less barrier protecting investors.

The biggest risk here is—if, under conditions where regulatory capacity is far from sufficient, we push crypto assets toward more retail and institutional investors, then once fraud and criminal activities are exposed on a large scale, it could drag the entire industry down. Instead of rushing to legislate, it’s better to first ensure that regulatory agencies have enough personnel, funding, and authority.

The real solution should be: establish a unified legal framework for trading that covers difficult-to-classify digital assets like Bitcoin and Ethereum, with rules jointly formulated by the SEC and CFTC to ensure market transparency, protect investors from scams, and provide full disclosure of information. But until Congress truly empowers and funds the regulators, the crypto market must adhere to the simplest principle—caveat emptor.