Regulators Signal Thaw in Crypto Clarity Battle

The U.S. Securities and Exchange Commission (SEC), under the leadership of Chairman Paul Atkins, is moving forward with Project Crypto to clarify the regulatory landscape for digital assets, particularly focusing on token classification and custody. This initiative is part of broader efforts to coordinate with the Commodity Futures Trading Commission (CFTC) to enhance regulatory clarity for spot crypto asset products. The joint staff statement from the SEC and CFTC clarifies that registered exchanges are not prohibited from facilitating the trading of certain spot commodities, which includes crypto assets. This represents a significant shift in approach compared to prior regulatory ambiguity.

The joint initiative aligns with recommendations from the President’s Working Group on Digital Asset Markets, which aims to position the U.S. as a global leader in blockchain innovation. According to the statement, the coordination between the SEC and CFTC will support the development of on-chain trading venues and encourage market participants to explore options for listing and trading crypto assets. The focus is on promoting innovation while ensuring investor protections, a balance seen as critical for the long-term viability of the sector.

Wintermute Trading, a major digital asset market-maker, recently submitted feedback to the SEC’s Crypto Task Force, emphasizing the need for regulatory clarity in tokenized securities. The firm requested that core network tokens like Bitcoin and Ethereum not be classified as securities, a stance echoed by industry participants who argue that such a classification could hinder the growth of decentralized systems. Wintermute also advocated for the inclusion of tokenized securities in decentralized finance (DeFi) protocols, including liquidity pooling and direct lending, without subjecting them to broker-dealer rules.

The real-world asset (RWA) tokenization market is gaining traction, with its global value approaching $28 billion. Companies like Galaxy Digital have taken pioneering steps, issuing tokenized equity on blockchain networks such as Solana. Dinari, another firm, recently became the first tokenized stock trading entity to secure a broker-dealer license, highlighting the potential for institutional-grade compliance in this space. However, major exchanges like Kraken and Coinbase are still awaiting regulatory approval for their tokenized equities.

DeFi lending protocols have also seen substantial growth, with total value locked (TVL) more than doubling since January to over $127 billion. The rise is attributed to institutional adoption of stablecoins and tokenized RWAs. Platforms like Maple Finance and Euler have seen significant increases in liquidity, driven by innovative offerings such as Aave Labs’ Horizon, which allows tokenized RWAs to be used as collateral for stablecoin borrowing. These developments underscore the expanding role of tokenized assets in facilitating institutional participation in DeFi.

The joint statement from the SEC and CFTC, while not legally binding, signals a regulatory environment more open to crypto innovation. The agencies have indicated readiness to support exchanges seeking to trade certain spot crypto products and to address technical and operational questions. The focus remains on balancing market choice and regulatory oversight, with an emphasis on transparency and investor protection. As the industry evolves, continued dialogue between regulators and market participants will be essential for shaping a regulatory framework that supports both innovation and stability.

Source:

[1] Wintermute Urges SEC on Tokenized Securities (https://www.cryptopolitan.com/wintermute-urges-sec-on-tokenized-securities/)

[2] SEC-CFTC Project Crypto-090225 (https://www.sec.gov/newsroom/speeches-statements/sec-cftc-project-crypto-090225)

[3] SEC and CFTC Staff Issue Joint Statement on Trading (https://www.sec.gov/newsroom/press-releases/2025-110-sec-cftc-staff-issue-joint-statement-trading-certain-spot-crypto-asset-products)