U.S. Crypto Regulation at Crossroads as Lawmakers Split Oversight Between SEC and CFTC

The U.S. Securities and Exchange Commission (SEC) is accelerating efforts to clarify the regulatory status of cryptocurrencies tied to investment contracts, with Chairman Paul Atkins emphasizing a balanced approach that supports innovation while protecting investors. Speaking at a Federal Reserve Bank of Philadelphia event, Atkins outlined a roadmap for exemptions and streamlined processes to reduce regulatory uncertainty in the blockchain space, as reported by CoinDesk. His remarks highlight the SEC's focus on defining the boundaries of its jurisdiction, particularly for assets that may no longer retain investment contract status even if they continue to trade on blockchains.

Parallel to the SEC's initiatives, the U.S. Senate Agriculture Committee has introduced a bipartisan draft bill that seeks to reshape crypto regulation by distinguishing between "digital commodities" and "investment contracts," as described by Cryptopolitan. The proposal, led by Senators John Boozman (R-AR) and Cory Booker (D-NJ), positions the Commodity Futures Trading Commission (CFTC) to oversee digital commodities like Bitcoin and Ether, while the SEC retains authority over investment contracts, according to IHODL. This legislative shift aims to create a clearer framework for financial institutions, enabling them to engage with crypto assets without the ambiguity that has hindered market growth, as reported by Cryptopolitan.

The bill also mandates collaboration between the SEC and CFTC, signaling a departure from the SEC's previous dominance in crypto enforcement. According to the draft, the CFTC would gain expanded authority to register trading platforms, enforce disclosure rules, and collect fees from crypto entities to fund oversight, as noted by Cryptopolitan. This realignment reflects broader industry calls for a more structured approach to regulation, with stakeholders like the Blockchain Association praising the draft as a "step toward establishing clear, commonsense rules," as reported by CryptoNews.

Atkins' speech underscored the SEC's commitment to humility in its regulatory reach, explicitly excluding network tokens, digital collectibles, and "digital tools" from its securities jurisdiction. He emphasized that while the SEC will continue to oversee tokenized securities, it aims to avoid stifling innovation by restricting where such assets can trade. This aligns with the Senate bill's vision of a dual regulatory framework, where the CFTC's oversight of commodities complements the SEC's focus on investment contracts, as reported by CoinDesk.

Recent developments in tax policy further support institutional adoption of crypto. The U.S. Treasury and IRS introduced Revenue Procedure 2025-31, which allows crypto ETFs and trusts to stake digital assets and distribute rewards to investors. This safe harbor resolves longstanding legal uncertainties, enabling regulated funds to participate in proof-of-stake networks like Ethereum, as reported by Yahoo Finance. The move is seen as a catalyst for institutional capital inflows, with analysts predicting a surge in staking-related assets under management.

The confluence of these regulatory efforts—SEC clarity, Senate legislation, and tax reforms—signals a pivotal moment for the crypto industry. While challenges remain, including finalizing market structure rules and addressing anti-money laundering concerns, as reported by Cryptopolitan, the momentum toward a cohesive U.S. crypto framework is gaining bipartisan traction. As lawmakers and regulators continue to refine these policies, the market's ability to attract institutional investors and foster innovation will hinge on consistent and predictable oversight.