Market regulator shrinks as crypto oversight expands

The federal agency overseeing crypto and prediction markets has lost staff and brought fewer enforcement actions during the second Trump administration, even as it is charged with writing new rules for the expanding markets.

The declines have been steep. They affect two separate parts of regulation: setting standards for market participants and enforcing those standards when the agency identifies possible violations. The agency’s rulemaking responsibilities have continued while its workforce and enforcement activity have contracted.

More rules, less enforcement activity

Crypto and prediction markets are expanding at the same time the regulator is being asked to define how they should operate. That work can determine which requirements apply and how businesses must comply.

Enforcement actions serve a different function. They are the formal steps a regulator takes to address conduct it believes may violate the rules. A decline in those actions means the agency is bringing fewer cases while the markets under its authority grow.

The staffing reduction also matters because employees carry out both assignments. The agency must use its smaller workforce to develop new standards while continuing oversight of existing market activity.

What the changes put in focus

The central question is how the regulator divides its reduced capacity between writing rules and enforcing them. The pace and scope of new regulations will show how the agency approaches its expanded workload.

Its future staffing levels and enforcement record will offer separate measures of regulatory capacity. New rules can establish expectations for crypto and prediction markets, while staffing and enforcement determine how actively the agency can monitor compliance and respond to possible violations.