The CLARITY Act, a bill aimed at providing regulatory clarity for digital assets, has moved forward in Congress. However, experts are raising red flags about whether the Commodity Futures Trading Commission (CFTC) is prepared to handle its expanded responsibilities. Tonantzin Carmona, a fellow at the Brookings Institution, has expressed worries that the legislation assigns the CFTC a massive new oversight role without ensuring the agency has adequate resources. The bill, formally known as the Digital Asset Market Clarity Act, would designate the CFTC as the primary regulator for spot trading of digital commodities, a shift that could place significant strain on the agency.
According to budget documents, the CFTC’s enacted budget for fiscal year 2026 was roughly $365 million, though it requested $410 million and 650 full-time staff for fiscal year 2027. Carmona argues this funding level is insufficient for the new duties the CLARITY Act would impose. She compared the scale of these responsibilities to major post-financial-crisis regulations, emphasizing that the CFTC has never had to oversee a retail-heavy market like crypto. The SEC, which currently handles much of crypto oversight, operates with a substantially larger budget, making the transition challenging.
The CLARITY Act would give the CFTC exclusive authority over spot transactions in digital commodities, requiring crypto exchanges, brokers, dealers, and custodians to register with the agency. The bill mandates rulemaking within 360 days and registration requirements within 270 days. The Senate Banking Committee, which advanced the bill in May 2026, framed it as a step toward a cohesive national market structure for digital assets. Supporters argue it would end the jurisdictional tug-of-war between the SEC and CFTC, providing much-needed clarity for the industry.
Critics, however, focus on the differences between the CFTC’s traditional oversight of derivatives markets and the realities of spot crypto trading. The CFTC has extensive experience with futures and swaps, which are predominantly used by institutional investors. In contrast, spot crypto markets serve many retail participants, raising consumer protection concerns like fraud and manipulation. Carmona warned that simply reclassifying crypto assets as digital commodities does not automatically transfer the SEC’s investor protection capabilities to the CFTC. Assets like Bitcoin, Ether, Solana, and XRP could fall under the new classification, prompting firms to seek clearer registration pathways.