Supreme Court ruling expanding Trump's authority over federal agencies raises questions for SEC, CFTC as crypto rulemaking advances

Quick Take

• A Supreme Court ruling comes as regulators like the SEC and the CFTC are in the middle of a new era of cryptocurrency regulation with plans to implement rule changes, tailor its rules, and issue exemptions.
• One former agency official said fewer commissioners could hamper a regulator's effectiveness, calling the Supreme Court's ruling "unfortunate."

A recent Supreme Court ruling expanding President Donald Trump's authority to remove leaders of many independent federal agencies could have broader implications as key financial regulators move forward with rulemaking, including rules affecting digital assets.

The case began in 2025 when President Trump fired Rebecca Slaughter, a Democratic commissioner at the Federal Trade Commission. Last week, the Supreme Court ruled 6--3 in Trump's favor, expanding the president's authority to remove leaders of independent federal agencies, with the exception of the Federal Reserve.

The ruling comes as regulators like the Securities and Exchange Commission and the Commodity Futures Trading Commission are in the middle of a new era of cryptocurrency regulation with plans to implement rule changes, tailor their rules, and issue exemptions.

Both agencies at full strength are designed to operate with commissioners at the helm, with no more than three belonging to the same political party. However, the SEC currently has three Republican commissioners, while CFTC Chair Michael Selig is the sole commissioner at the agency.

Some say a full panel of commissioners is essential to healthy debate and produces rules that are more durable across administrations. Others argued the practical effects may be more limited. A former CFTC official said agency actions remain constrained by statutory requirements and the Administrative Procedure Act, regardless of how many commissioners are serving.

One former agency official said fewer commissioners could hamper a regulator's effectiveness, calling the Supreme Court's ruling "unfortunate."

"I'm a firm believer that more minds and more debate and more friction of ideas will lead to better outcomes," they said in an interview with The Block this week. "So, as they're going through this, perhaps we get a suboptimal outcome because you have fewer people at the table thinking through the issues."

Rules adopted by bipartisan commissions are also more durable, and chairs always try to secure bipartisan votes. Without that, it may be easier for opponents to roll rules back, they said.

"It becomes an easy target for an ideologue or an opponent to say, well this really wasn't debated thoroughly so we should go back to the drawing board," the former agency official said.

What happens under a new administration?

The concern extends beyond the current administration. Rules adopted by a diminished commission may prove easier for future administrations to revisit or overturn.

"You're going to have policy, the market's going to adjust and then you have to worry about a day where someone or a group of people in a new administration might say, well, that wasn't really debated under the construct that was intended by Congress, i.e. a full commission, and or that reason we're going to change it or roll it back and that's too bad," they said.

The vacancies have drawn added attention as Congress considers landmark legislation that would divide oversight of digital assets between the SEC and CFTC, giving the latter significantly greater authority. Lawmakers have pressed Trump to appoint CFTC commissioners in order to advance that broader crypto bill.

The Supreme Court case ruling also prompted questions among some, given Trump's close ties to the crypto sector. Last week, the Office of Government Ethics released Trump's financial disclosure report, which revealed hundreds of billions of dollars in bitcoin and ether tied to his family's crypto company called World Liberty Financial.

"The President has been very clear about his positions on crypto and prediction markets, whether through executive orders, statements, negotiations with Congress, or his own personal business activities, so it's fairly safe to assume regulators will follow that lead," said Tyler Gellasch, president and CEO at investor- focused Healthy Markets Association. He was previously counsel to Democratic SEC Commissioner Kara Stein.

Over the years, Congress has sought to create firewalls between the White House and regulators, which is now no longer the case, he said. When asked about what happens as new presidential administrations roll in, Gellasch said it adds volatility.

"Politics, like markets, are cyclical," he said. "And the more the political winds are at the back of crypto today, the more likely the industry is to face political hurricanes in the future."

'Full force of the law'

A former CFTC official echoed some of those concerns, but also said the Supreme Court ruling reaffirms the president's powers.

"With the Supreme Court reaffirming that the president has the power to shape, fire personnel at all levels of the administration, I think the judicial challenges to a single-member body's actions become much less realistic," they told The Block.

When drafting rules, federal agencies also have to follow the Administrative Procedures Act, or APA, which governs how federal agencies develop and issue rules, including notice and comment procedures.

If the rulemaking process follows the APA, then it doesn't matter how many commissioners voted in favor of it, the former CFTC official said.

"As long as commissions are following their statutes, which may or may not require a certain number of commissioners for a quorum, and as long as they're following the APA, then anything they are doing is legal and has the full force of the law," they said.

Still, single-member commissions may be detrimental, despite the benefits of being able to move quickly with just one lead, they said.

"If there are more examples of single commissioner agencies in the future, does the lack of need for compromise mean that more mistakes get made in publishing rules and are those things that we'll have to live with, are those things that will then provoke more reviews, more rewrites of old rules?" they said.

The former CFTC official also spoke about how the Supreme Court case could have had an effect if former SEC Chair Gary Gensler had still been leading the agency. Gensler was viewed as being critical of the crypto industry and pursued enforcement actions against several major crypto firms, and maintained that many cryptocurrencies qualified as securities.

Republican SEC Commissioner Hester Peirce, who has led the charge in clarifying rules for crypto, may not have been at the agency, the former CFTC official said.

"Imagine the loss of intellect, feedback, and accountability if Hester wouldn't have had a voice," they said.

"In a future Democrat administration that is again antagonistic to crypto, this [ruling] could be a big negative because it could remove the voices that would otherwise present a different view and help the public hold agencies accountable for exceeding the law and their statutory mandate," they added.

But at the end of the day, the ruling is still new.

"It's early," the former CFTC official said.