Crypto Regulation Power Struggle Intensifies as SEC Steps Back

The U.S. Securities and Exchange Commission (SEC) has notably omitted cryptocurrency from its 2026 examination priorities, marking a significant departure from recent years when digital assets were a central focus. The Division of Examinations did not include a dedicated section on crypto in its latest priorities document. This shift aligns with broader regulatory and political trends under President Donald Trump, who has championed deregulation in the crypto sector.

The omission contrasts sharply with the SEC's 2023 and 2024 priorities, which explicitly named crypto assets, spot Bitcoin and Ether ETFs, and emerging technologies like blockchain. Last year, under Chair Gary Gensler, the agency emphasized monitoring crypto-related services due to market volatility and regulatory risks. However, current Chair Paul Atkins has framed the 2026 priorities as a move toward "constructive dialogue" with firms, stating that examinations should avoid being a "gotcha" exercise. The report highlights focus areas such as fiduciary duty, custody protections, and risks tied to AI and automated investment tools.

The Agriculture Committee's bill expands CFTC oversight of "digital commodities," requiring exchanges to segregate customer assets and adopt capital safeguards akin to traditional commodity markets. Meanwhile, the Banking Committee's draft grants the SEC authority over "ancillary assets," which straddle the line between securities and commodities, while establishing a framework for tokens to "graduate" from securities treatment as projects decentralize. These proposals aim to bring clarity to a sector long plagued by regulatory ambiguity but leave unresolved questions about overlapping jurisdictions and enforcement mechanisms.

The Digital Asset Market Structure Bill, merging elements from both Senate drafts, could redefine how exchanges operate, mandate stricter anti-manipulation rules, and impose dual registration requirements for platforms handling both securities and commodities. Analysts like Jeff Park argue that CFTC-led regulation is "directionally correct," as its expertise in derivatives and commodities aligns with crypto's functional similarities to assets like gold or oil.

While the SEC maintains it is not abandoning crypto entirely, its 2026 priorities reflect a strategic pivot toward "core areas" such as cybersecurity resilience and AI risks. The agency noted it may still examine crypto-related services "when appropriate," but the absence of a dedicated focus has left market participants questioning future enforcement actions. This ambiguity is compounded by parallel efforts to tax foreign crypto accounts under the OECD's Crypto-Asset Reporting Framework (CARF), which the White House is reviewing.

The regulatory landscape remains fluid as lawmakers and agencies navigate competing visions for crypto governance. With the CFTC and SEC vying for authority and legislative timelines uncertain, stakeholders face a critical juncture. The outcome will shape not only compliance frameworks but also the sector's growth trajectory, investor protections, and innovation potential in the years ahead.