Washington’s crypto pivot from enforcement to market structure
15 Apr 2026
Tahlia Kraefft examines the joint framework between the US Securities and Exchange Commission and Commodity Futures Trading Commission’s role in Washington’s crypto supervisory shift and wider effort to integrate digital assets into the traditional financial regulatory system
Image: seanpavonephoto/stock.adobe.com
Oversight overhaul
In early 2026, Washington underwent a significant regulatory shift from an enforcement-led posture toward establishing a broad market structure for cryptocurrencies. This pivot was accelerated by coordinated action by the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) entering into a historic partnership and their release of a 17 March landmark joint interpretative guidance.
The SEC and CFTC signed a Memorandum of Understanding (MoU) on 11 March, formalising the institutional structure for inter-agency coordination, and setting out how the US financial regulators will organise enforcement where their responsibilities intersect. This MoU demonstrates an intentional deepened cooperation between the two bodies intended to harmonise regulatory frameworks and provide comprehensive financial markets supervision. Additionally, the move intends to end long-running tensions over jurisdictional boundaries, as the emergence of the digital asset market and technological developments have led to blurred boundaries between securities and derivatives.
Simon Forster, global co-head of digital assets, TP ICAP, remarks: “We now see the two leading US regulators collaborate and proactively engage with the industry to help provide sensible and suitable rules of the road – the contrast could not be starker. Regulatory clarity is a prerequisite for traditional firms to enter a new market, and we are now seeing this new approach reflected in the engagement and activity across our institutional client base.”
Jody Mettler, chief operating officer, BitGo, adds: “The March 2026 MOU and related guidance clearly defines jurisdiction and shows the industry that these agencies are willing to coordinate. That is a meaningful improvement, even if it still falls short of full legislative certainty.”
Despite a coherent crypto legislation not being yet approved by Congress, the SEC-CTFC interpretation lays down the groundwork for market framework through outlining asset classes, setting out agency jurisdiction, and coordinating market supervision. The joint guidance represents a wider shift in supervisory approach to enhance regulatory coherence and competitiveness, and decrease reliance on disciplinary enforcement. The agencies are also seeking to align this framework to complement future congressional market design regulation. Together, these changes combined reflect a structural overhaul of the US crypto regulation from enforcement-led ambiguity to a systematic, taxonomy-based framework supported by organised inter-agency coordination.
Enforcement-first era
The SEC has notably sought to distance itself from its prior regulation by enforcement strategy, where US cryptocurrency rules were mostly determined by high-profile lawsuits in contrast to formal guidelines. Under this enforcement-first approach, the SEC opted to have courts and settlements set the boundaries, labeled tokens as unregistered securities, and alleged cases against firms, in absence of a fixed rules-based framework.
Enforcement actions prosecuting firms such as Ripple Labs, Coinbase, and Binance formed the regulatory status quo, influencing market dynamics without a clear, holistic system.
The SEC maintained that existing securities laws already applied through the Howey Test, which defines whether something is an investment contract, instead of releasing crypto-specific rules.
The CFTC also took a similar but more focused outlook, largely addressing fraud, manipulation, and derivatives infringements. This prior administration’s strategy of regulating by enforcement created regulatory uncertainty evident throughout the crypto industry, according to Matthew Lafferman, white collar and litigation partner, Dentons, US. He says this ambiguity also extended to when a crypto asset would constitute a commodity or security.
“Crypto companies were often stuck between aggressive enforcement and the challenges in navigating the sometimes competing regulatory frameworks challenges.
A collaborative approach between the SEC and CFTC reinforces the new regulatory guidance announced by the SEC, with the new regulatory clarity encouraging market participants and new entrants.”
Mettler, comments that with the crypto industry in its growth phase, it could not build confidently with the previous model, which saw firms interpreting crypto policy through lawsuits and settlements.
“The biggest shift is from regulation by enforcement to regulation by definition.”
Mark Williamson, chief commercial officer, ClearToken, notes: “SEC using litigation as a form of regulatory policy by enforcement, rather than providing clear guidance, was painful, when you’re trying to work out how to engage with this industry. Bringing actions against exchanges, token issuers, intermediaries arguing that existing securities framework applied to all crypto assets.”
He continues: “The result was regulatory paralysis, and institutions who wanted to participate but could not get comfortable with the legal risk, with reputable players either stayed out or moved offshore. There was litigation which was masquerading as policy. The MOU signals that the US regulators are finally ready to govern, not just to prosecute.”
Simon Forster, global co-head of digital assets, TP ICAP describes SEC’s regulation by enforcement approach as “forceful, litigation-heavy approach paired with a lack of guidance and industry engagement.”
A taxonomy that classifies crypto assets
The SEC and CFTC’s 17 March landmark joint interpretive guidance release marks a broader move in US crypto policy toward a principals-based regulatory framework, representing the first time a framework has been provided for how crypto and other digital assets are viewed under the federal securities law.
Under the joint interpretation the types of cryptocurrencies classified as securities and how a non-security digital asset could fall under specific criteria to become an investment contract is outlined.
16 large crypto assets are reclassified as ‘digital commodities’ rather than securities, under federal US law.
“The remaining four categories crypto tokens are grouped into include digital collectibles, digital tools, stablecoins, and digital securities.
Their primary oversight is changed from SEC to the CFTC, reinforced by the agencies entering into the 11 March MoU.
The SEC has specified that the federal securities legislation only pertains to digital securities.
The regulator dictates that securities laws could apply to a ‘non-security’ crypto asset if an issuer provides it by encouraging investment in a common enterprise from which a buyer could expect to gain proceeds.
It overhauls the investment-contract structure set out by the US Supreme Court in SEC v W. J. Howey as the primary instrument for determining if digital tokens and associated transactions were obliged under securities-law requirements.
The guidance also confirms protocol mining or staking, and the wrapping non-security crypto assets do not constitute offers or sales of securities.
SEC Chairman Paul S. Atkin, comments the announcement acknowledged “most crypto assets are not themselves securities. And it reflects the reality that investment contracts can come to an end”.
The Commission says it marks a key step in providing improved clarity concerning its treatment of crypto assets, and improves Congressional efforts to organise a sweeping market structure framework into statute.
Ari Redbord, global head of Policy and Government Affairs, TRM Labs says the introduction of a functional token taxonomy and drawing clearer jurisdictional lines between the SEC and CFTC removes overlap and is a meaningful step.
The joint SEC-CFTC guidance, he labels as the most definite step the US has taken towards a coherent digital asset regulatory framework after a period of ambiguity.
“The explicit designation of certain assets as digital commodities under CFTC spot oversight, along with clarity that activities like mining, protocol staking, and certain airdrops are not inherently securities transactions, provides the kind of operational guidance the market has been asking for.
“At the same time, the guidance preserves a critical principle: classification is not dispositive. Even assets categorised as commodities or tools can still fall within securities laws if offered as part of an investment contract. That balance — clarity with retained enforcement authority — is essential from a market integrity and investor protection standpoint.
“From a compliance and national security perspective, this kind of clarity matters. Reduced ambiguity enables more consistent anti-money laundering (AML) and monitoring frameworks, supports responsible innovation, and lowers barriers to institutional participation in the U.S. market. It also brings the US closer in line with the more than 100 jurisdictions that have already implemented formal classification regimes.”
Forster explains the relabelling provides the clarity that is required for traditional financial services firms to begin engaging with spot crypto.
“The industry is transitioning out of a retail driven, primarily offshore space and evolving into an institutional and onshore market. The opportunity is for those firms who can navigate and operate effectively in this more structured and regulatory focused environment whilst adapting to the nuances of digital assets.”
Williamson comments that reclassification opens the door to institutional-grade market structure and is a consquence of moving oversight to CFTC in the spot markets but says the body is more accustomed to derivatives and future market infrastructure.
He argues big risk areas remain, noting that “the boundary between securities and commodities is not fully defined, and tokens with governance rights or staking mechanics will sit in gray areas creating risk”.
Additionally he says the guidance creates a number of compliance headaches and is still administrative, not legislative which he is concerned about. “It can shift if there’s a change in administration.
“There is institutional capital that’s waiting in the sidelines, whether that’s pension funds, custodians or prime brokers, they need regulatory certainty before boards will approve digital asset strategies.”
Commodities lens
The new guidance establishes many major crypto as commodities, treating them similarly to other energy products, agricultural goods, and metals. Under this structure, tokens are recognised as digital resources that facilitate network operations in contrast to financial tools connected to the profit-driven actions of an individual issuer.
It changes the legal and functional status from a centralised investment contract to a decentralised, utility-focused asset. Under the CFTC market-conduct aims, there are substantial differences in compliance enforcement and investor protection from the SEC’s disclosure-heavy focus.
CFTC’s supervision of the commodity derivatives markets involves an anti-fraud rule over spot commodity trading, however the body does not oblige the same level of registration, disclosure, and reporting obligations.
Consequently there are less prescriptive disclosure requirements, reduced ongoing reporting obligations, and an increased reliance on market surveillance for securities law imposed.
Commodities regulation is overall more lenient securities law, enabling wider trading access and quicker innovation, according to Lafferman, who says this will result in greater interest and investment from traditional finance.
“Commodities regulation is more market focused and has less strict oversight and disclosure requirements than securities regulation. This is a significant opportunity for firms to create and package innovative new crypto products.
“On the other hand, consumers do not have the benefit of the transparency created by disclosure and reporting obligations. The tradeoff for consumers is simple—more upside but higher risk.”
This new classification of major tokes reduces one of the biggest barriers to institutional participation Mettler says, which she describes as a major unlock: “Most institutions understand the commodities market and this classification eliminates the fear of inadvertently triggering securities violations.
“However, the biggest remaining risks don’t always stem from the tokens themselves, but the products built around them — particularly those involving staked assets.
She says this classification allows crypto companies to standardise their products and infrastructure, especially around trading and settlement.
Mettler explains the market is shifting to a structure similar to future and FX markets, “which institutions are accustomed to: clear delineation between custody, execution, clearing, collateral, and oversight. This should make the market more operationally mature and easier for institutions to enter”.
According to Forster, the relabelling gives the necessary clarity for traditional financial firms to start engaging with spot crypto.
He notes “The industry is transitioning out of a retail driven, primarily offshore space and evolving into an institutional, and onshore market. The opportunity is for those firms who can navigate and operate effectively in this more structured and regulatory focused environment whilst adapting to the nuances of digital assets.”
Forster explains: “The recent CFTC guidance points to a commodities-style framework for mature crypto assets that have the appropriate characteristics including level of decentralisation, utility, and fungibility. In practice this resembles the more familiar futures/derivatives markets and means less strict registration and reporting requirements compared to securities.”
Jesse Knutson, head of operations, Bitfinex Securities, says tokenisation represents a structure that is familiar to commodities markets, and believes it has resulted in early adoption in this sector, including the uptake of tokenised gold. “In commodities markets, assets are standardised, heavily intermediated and primarily valued for their use as collateral, hedging tools and liquidity instruments rather than for growth. Tokenisation applies that same logic but makes ownership more mobile, settlement faster, and collateral reusable across venues and time zones.”
Winners and losers?
Lafferman explains both crypto-native firms — familiar with the technology and industry-specific innovation – and traditional finance — with experience in packaging different financial products to a wider set of consumers — stand to benefit from the interpretative guidance. In his view the firms that will most succeed will be those that can combine the best of both worlds, and says it will encourage institutional participation.
“Major banks should, if they have not already, be encouraged to enter the fray. Early crypto players will have the benefit of the broader consumer access brought by the banks but will have to contend with competition from these sophisticated financial institutions.”
Williamson explains the regulatory shift will tilt the playing field in favour of structured compliance players for both crypto native firms and larger financial institutions.
“Traditional financial institutions have compliance, infrastructure, capital and distribution that crypto firms are struggling to match. When regulatory certainty arrives, TradFI can move quickly. I’ve seen this already with ETF approvals, Bitcoin ETFs, and subsequently institutional inflows. We’ve seen a precedent for that already, crypto native firms that have invested in compliance, building proper custody, AML frameworks, and risk management are not suddenly disadvantaged. Many have a deep understanding of the technology and market microstructure that TradFi players are still learning. What the regulatory shift does eliminate is the advantage of regulatory arbitrage, meaning that firms that compete by operating in jurisdictions or structures specifically designed to avoid oversight, now face a leveling of that field, which is healthy.”
Williamson argues the new guidelines will compress timelines for both large banks and early crypto players and accelerate their entry into the sector.
“Major US Banks have been watching this space very carefully including J.P. Morgan, Goldmans Sachs, all of whom have digital asset programs. What’s held back acceleration has been legal risk that is the fear that the assets they custody or clear might be deemed unregistered security.
Williamson says the clarity brought by the MoU and reclassification of commodities should substantially reduce that risk. He expects accelerated announcements — around digital assets, custody, prime brokerage, and clearing to happen over the next 12 to 18 months.
Forster explains the regulatory shift can and likely will benefit the two types of firms for different reasons: “Crypto firms that have the scale, appropriate regulatory permissions, compliance standards, and governance controls should flourish given their crypto experience and digitally native footprint. For traditional financial services firms, already operating across regulated markets globally and with some level of infrastructure to support trading and settlement of crypto, this shift clears a path towards this niche asset class becoming institutionally investable. More importantly this shift will position both groups to play a leading role in defining and shaping the on-chain markets of tomorrow.”
Traditional financial institutions and crypto-native firms can benefit from this guidance in different ways, Knutson notes: “Traditional institutions gain comfort from clearer regulatory coordination, while crypto-native firms benefit because the rules are becoming more operationally realistic and less adversarial than in the prior enforcement-heavy phase.
He explains that greater clarification around jurisdiction shows decreased hesitation around banks and large intermediaries: “Clearer jurisdiction should lower some of the hesitation among banks and large intermediaries, although many have already been moving in that direction. For early players in the digital assets sector, this raises the competitive bar, but it also validates the market they helped build and creates more partnership, liquidity and distribution opportunities.”
Framework limitations
The joint interpretation acts as a trial run for the Digital Asset Market Clarity Act (Clarity Act), adopting a similar regulatory posture while Congress works to pass the final statute. The framework sets out an immediate regulatory structure narrowing the divide between the existing enforcement based supervision and the future codified legal structure provided by the Clarity Act. Lafferman says the guidance is certainly welcomed with the delays in passing the Clarity Act:
“But enacting the Clarity Act should still remain a high priority, as it carries the benefits of permanence brought by legislation. Firms will be able to at least rely on this framework through the end of this administration. It still remains to be seen how a new administration would view this guidance and there are reasons to believe that a new administration will not view crypto as harshly as the prior one.
“That said, as Chairman Atkins himself recently recognised, only Congress can ‘future-proof’ regulation in the crypto industry.”
Mettler argues the joint guidance’s release may risk taking urgency out of the Clarity Act legislation: “Once agencies start coordinating and giving the market more room to operate, the pressure on Congress tends to ease. This is still policy, not law, so we end up in this middle ground where firms can move forward, but without conviction.
“The longer we rely on agency guidance, the longer we delay building a durable framework. I’d argue this should increase urgency because now that we know what alignment looks like, Congress has the opportunity to solidify the legislation before further shifts occur.
“It’s a meaningful step forward but again, it’s only guidance, not law. Therefore, the framework could shift with administrations and the industry recognises this. The market would benefit further from durable legislation that gives companies the ability to build for the long term.”
Forster remarks: “The guidance provides immediate practical clarity reducing the near-term gaps the Clarity Act aims to address. However, long-term statutory codification remains important for full market certainty, especially on mature blockchain definitions, safe harbors, and permanent jurisdictional lines.
“Firms can look to this with reasonable confidence in the near term, as it represents coordinated agency positioning, and a clear tone and approach around enforcement and supervision.
“For wholesale institutional participants, this interim clarity supports business planning, and initial investment, but Congressional action will provide enduring stability and enable the asset class to scale and reach its potential.”
Williamson believes it makes it more urgent to get the Clarity Act into law, reasoning that guidance is reversible unlike law: “There’s a temptation to think because the SEC and CFTC have now issued guidance and an MoU, that the pressure for legislation has raised or has eased, and that’s not the case. The opposite is true.
“The guidance actually clarifies exactly what Congress needs to legislate, making the Clarity Act more achievable and more necessary. The timing of that we will see, because these things can take time to get through.
“The guidance is administrative and represents the current administration’s interpretation of existing law.
“A change in administration, a change in the SEC or CFTC leadership, could shift that framework again. We’ve seen that when Donald Trump came in and changed leadership for both SEC and CFTC, that changed the focus and the speed at which this stuff is going through.
“The Clarity Act addresses a core question: which assets are securities and which are commodities? And that’s important, and how these two interact in a way that would be durable across administrations.
“We hope that the foundations have been laid in the right sort of way. Joint guidance effectively roadmaps what that legislation needs to say. In some ways, the MoU is the best argument in favour of the Clarity Act, demonstrating that the two agencies can work together. As ever you plan for the guidance. That you need to build for the legislation, but don’t confuse the two.”
Conclusion
The SEC-CFTC joint guidance and MoU reflects a broader shift in US crypto supervisory approach to enhance regulatory coherence and competitiveness, as it moves from case-by-case policing towards a formalised market structure framework, classifications of assets and rules, and coordinated supervision.
Although grey areas remain — including setting out the boundary between securities and commodities and it has not been codified in legislation — the guidance functions as an immediate regulatory structure that bridges the divide between the prior enforcement based supervision and the comprehensive legal structure that Congress intends to enact through the Clarity Act.
In early 2026, Washington underwent a significant regulatory shift from an enforcement-led posture toward establishing a broad market structure for cryptocurrencies. This pivot was accelerated by coordinated action by the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) entering into a historic partnership and their release of a 17 March landmark joint interpretative guidance.
The SEC and CFTC signed a Memorandum of Understanding (MoU) on 11 March, formalising the institutional structure for inter-agency coordination, and setting out how the US financial regulators will organise enforcement where their responsibilities intersect. This MoU demonstrates an intentional deepened cooperation between the two bodies intended to harmonise regulatory frameworks and provide comprehensive financial markets supervision. Additionally, the move intends to end long-running tensions over jurisdictional boundaries, as the emergence of the digital asset market and technological developments have led to blurred boundaries between securities and derivatives.
Simon Forster, global co-head of digital assets, TP ICAP, remarks: “We now see the two leading US regulators collaborate and proactively engage with the industry to help provide sensible and suitable rules of the road – the contrast could not be starker. Regulatory clarity is a prerequisite for traditional firms to enter a new market, and we are now seeing this new approach reflected in the engagement and activity across our institutional client base.”
Jody Mettler, chief operating officer, BitGo, adds: “The March 2026 MOU and related guidance clearly defines jurisdiction and shows the industry that these agencies are willing to coordinate. That is a meaningful improvement, even if it still falls short of full legislative certainty.”
Despite a coherent crypto legislation not being yet approved by Congress, the SEC-CTFC interpretation lays down the groundwork for market framework through outlining asset classes, setting out agency jurisdiction, and coordinating market supervision. The joint guidance represents a wider shift in supervisory approach to enhance regulatory coherence and competitiveness, and decrease reliance on disciplinary enforcement. The agencies are also seeking to align this framework to complement future congressional market design regulation. Together, these changes combined reflect a structural overhaul of the US crypto regulation from enforcement-led ambiguity to a systematic, taxonomy-based framework supported by organised inter-agency coordination.
Enforcement-first era
The SEC has notably sought to distance itself from its prior regulation by enforcement strategy, where US cryptocurrency rules were mostly determined by high-profile lawsuits in contrast to formal guidelines. Under this enforcement-first approach, the SEC opted to have courts and settlements set the boundaries, labeled tokens as unregistered securities, and alleged cases against firms, in absence of a fixed rules-based framework.
Enforcement actions prosecuting firms such as Ripple Labs, Coinbase, and Binance formed the regulatory status quo, influencing market dynamics without a clear, holistic system.
The SEC maintained that existing securities laws already applied through the Howey Test, which defines whether something is an investment contract, instead of releasing crypto-specific rules.
The CFTC also took a similar but more focused outlook, largely addressing fraud, manipulation, and derivatives infringements. This prior administration’s strategy of regulating by enforcement created regulatory uncertainty evident throughout the crypto industry, according to Matthew Lafferman, white collar and litigation partner, Dentons, US. He says this ambiguity also extended to when a crypto asset would constitute a commodity or security.
“Crypto companies were often stuck between aggressive enforcement and the challenges in navigating the sometimes competing regulatory frameworks challenges.
A collaborative approach between the SEC and CFTC reinforces the new regulatory guidance announced by the SEC, with the new regulatory clarity encouraging market participants and new entrants.”
Mettler, comments that with the crypto industry in its growth phase, it could not build confidently with the previous model, which saw firms interpreting crypto policy through lawsuits and settlements.
“The biggest shift is from regulation by enforcement to regulation by definition.”
Mark Williamson, chief commercial officer, ClearToken, notes: “SEC using litigation as a form of regulatory policy by enforcement, rather than providing clear guidance, was painful, when you’re trying to work out how to engage with this industry. Bringing actions against exchanges, token issuers, intermediaries arguing that existing securities framework applied to all crypto assets.”
He continues: “The result was regulatory paralysis, and institutions who wanted to participate but could not get comfortable with the legal risk, with reputable players either stayed out or moved offshore. There was litigation which was masquerading as policy. The MOU signals that the US regulators are finally ready to govern, not just to prosecute.”
Simon Forster, global co-head of digital assets, TP ICAP describes SEC’s regulation by enforcement approach as “forceful, litigation-heavy approach paired with a lack of guidance and industry engagement.”
A taxonomy that classifies crypto assets
The SEC and CFTC’s 17 March landmark joint interpretive guidance release marks a broader move in US crypto policy toward a principals-based regulatory framework, representing the first time a framework has been provided for how crypto and other digital assets are viewed under the federal securities law.
Under the joint interpretation the types of cryptocurrencies classified as securities and how a non-security digital asset could fall under specific criteria to become an investment contract is outlined.
16 large crypto assets are reclassified as ‘digital commodities’ rather than securities, under federal US law.
“The remaining four categories crypto tokens are grouped into include digital collectibles, digital tools, stablecoins, and digital securities.
Their primary oversight is changed from SEC to the CFTC, reinforced by the agencies entering into the 11 March MoU.
The SEC has specified that the federal securities legislation only pertains to digital securities.
The regulator dictates that securities laws could apply to a ‘non-security’ crypto asset if an issuer provides it by encouraging investment in a common enterprise from which a buyer could expect to gain proceeds.
It overhauls the investment-contract structure set out by the US Supreme Court in SEC v W. J. Howey as the primary instrument for determining if digital tokens and associated transactions were obliged under securities-law requirements.
The guidance also confirms protocol mining or staking, and the wrapping non-security crypto assets do not constitute offers or sales of securities.
SEC Chairman Paul S. Atkin, comments the announcement acknowledged “most crypto assets are not themselves securities. And it reflects the reality that investment contracts can come to an end”.
The Commission says it marks a key step in providing improved clarity concerning its treatment of crypto assets, and improves Congressional efforts to organise a sweeping market structure framework into statute.
Ari Redbord, global head of Policy and Government Affairs, TRM Labs says the introduction of a functional token taxonomy and drawing clearer jurisdictional lines between the SEC and CFTC removes overlap and is a meaningful step.
The joint SEC-CFTC guidance, he labels as the most definite step the US has taken towards a coherent digital asset regulatory framework after a period of ambiguity.
“The explicit designation of certain assets as digital commodities under CFTC spot oversight, along with clarity that activities like mining, protocol staking, and certain airdrops are not inherently securities transactions, provides the kind of operational guidance the market has been asking for.
“At the same time, the guidance preserves a critical principle: classification is not dispositive. Even assets categorised as commodities or tools can still fall within securities laws if offered as part of an investment contract. That balance — clarity with retained enforcement authority — is essential from a market integrity and investor protection standpoint.
“From a compliance and national security perspective, this kind of clarity matters. Reduced ambiguity enables more consistent anti-money laundering (AML) and monitoring frameworks, supports responsible innovation, and lowers barriers to institutional participation in the U.S. market. It also brings the US closer in line with the more than 100 jurisdictions that have already implemented formal classification regimes.”
Forster explains the relabelling provides the clarity that is required for traditional financial services firms to begin engaging with spot crypto.
“The industry is transitioning out of a retail driven, primarily offshore space and evolving into an institutional and onshore market. The opportunity is for those firms who can navigate and operate effectively in this more structured and regulatory focused environment whilst adapting to the nuances of digital assets.”
Williamson comments that reclassification opens the door to institutional-grade market structure and is a consquence of moving oversight to CFTC in the spot markets but says the body is more accustomed to derivatives and future market infrastructure.
He argues big risk areas remain, noting that “the boundary between securities and commodities is not fully defined, and tokens with governance rights or staking mechanics will sit in gray areas creating risk”.
Additionally he says the guidance creates a number of compliance headaches and is still administrative, not legislative which he is concerned about. “It can shift if there’s a change in administration.
“There is institutional capital that’s waiting in the sidelines, whether that’s pension funds, custodians or prime brokers, they need regulatory certainty before boards will approve digital asset strategies.”
Commodities lens
The new guidance establishes many major crypto as commodities, treating them similarly to other energy products, agricultural goods, and metals. Under this structure, tokens are recognised as digital resources that facilitate network operations in contrast to financial tools connected to the profit-driven actions of an individual issuer.
It changes the legal and functional status from a centralised investment contract to a decentralised, utility-focused asset. Under the CFTC market-conduct aims, there are substantial differences in compliance enforcement and investor protection from the SEC’s disclosure-heavy focus.
CFTC’s supervision of the commodity derivatives markets involves an anti-fraud rule over spot commodity trading, however the body does not oblige the same level of registration, disclosure, and reporting obligations.
Consequently there are less prescriptive disclosure requirements, reduced ongoing reporting obligations, and an increased reliance on market surveillance for securities law imposed.
Commodities regulation is overall more lenient securities law, enabling wider trading access and quicker innovation, according to Lafferman, who says this will result in greater interest and investment from traditional finance.
“Commodities regulation is more market focused and has less strict oversight and disclosure requirements than securities regulation. This is a significant opportunity for firms to create and package innovative new crypto products.
“On the other hand, consumers do not have the benefit of the transparency created by disclosure and reporting obligations. The tradeoff for consumers is simple—more upside but higher risk.”
This new classification of major tokes reduces one of the biggest barriers to institutional participation Mettler says, which she describes as a major unlock: “Most institutions understand the commodities market and this classification eliminates the fear of inadvertently triggering securities violations.
“However, the biggest remaining risks don’t always stem from the tokens themselves, but the products built around them — particularly those involving staked assets.
She says this classification allows crypto companies to standardise their products and infrastructure, especially around trading and settlement.
Mettler explains the market is shifting to a structure similar to future and FX markets, “which institutions are accustomed to: clear delineation between custody, execution, clearing, collateral, and oversight. This should make the market more operationally mature and easier for institutions to enter”.
According to Forster, the relabelling gives the necessary clarity for traditional financial firms to start engaging with spot crypto.
He notes “The industry is transitioning out of a retail driven, primarily offshore space and evolving into an institutional, and onshore market. The opportunity is for those firms who can navigate and operate effectively in this more structured and regulatory focused environment whilst adapting to the nuances of digital assets.”
Forster explains: “The recent CFTC guidance points to a commodities-style framework for mature crypto assets that have the appropriate characteristics including level of decentralisation, utility, and fungibility. In practice this resembles the more familiar futures/derivatives markets and means less strict registration and reporting requirements compared to securities.”
Jesse Knutson, head of operations, Bitfinex Securities, says tokenisation represents a structure that is familiar to commodities markets, and believes it has resulted in early adoption in this sector, including the uptake of tokenised gold. “In commodities markets, assets are standardised, heavily intermediated and primarily valued for their use as collateral, hedging tools and liquidity instruments rather than for growth. Tokenisation applies that same logic but makes ownership more mobile, settlement faster, and collateral reusable across venues and time zones.”
Winners and losers?
Lafferman explains both crypto-native firms — familiar with the technology and industry-specific innovation – and traditional finance — with experience in packaging different financial products to a wider set of consumers — stand to benefit from the interpretative guidance. In his view the firms that will most succeed will be those that can combine the best of both worlds, and says it will encourage institutional participation.
“Major banks should, if they have not already, be encouraged to enter the fray. Early crypto players will have the benefit of the broader consumer access brought by the banks but will have to contend with competition from these sophisticated financial institutions.”
Williamson explains the regulatory shift will tilt the playing field in favour of structured compliance players for both crypto native firms and larger financial institutions.
“Traditional financial institutions have compliance, infrastructure, capital and distribution that crypto firms are struggling to match. When regulatory certainty arrives, TradFI can move quickly. I’ve seen this already with ETF approvals, Bitcoin ETFs, and subsequently institutional inflows. We’ve seen a precedent for that already, crypto native firms that have invested in compliance, building proper custody, AML frameworks, and risk management are not suddenly disadvantaged. Many have a deep understanding of the technology and market microstructure that TradFi players are still learning. What the regulatory shift does eliminate is the advantage of regulatory arbitrage, meaning that firms that compete by operating in jurisdictions or structures specifically designed to avoid oversight, now face a leveling of that field, which is healthy.”
Williamson argues the new guidelines will compress timelines for both large banks and early crypto players and accelerate their entry into the sector.
“Major US Banks have been watching this space very carefully including J.P. Morgan, Goldmans Sachs, all of whom have digital asset programs. What’s held back acceleration has been legal risk that is the fear that the assets they custody or clear might be deemed unregistered security.
Williamson says the clarity brought by the MoU and reclassification of commodities should substantially reduce that risk. He expects accelerated announcements — around digital assets, custody, prime brokerage, and clearing to happen over the next 12 to 18 months.
Forster explains the regulatory shift can and likely will benefit the two types of firms for different reasons: “Crypto firms that have the scale, appropriate regulatory permissions, compliance standards, and governance controls should flourish given their crypto experience and digitally native footprint. For traditional financial services firms, already operating across regulated markets globally and with some level of infrastructure to support trading and settlement of crypto, this shift clears a path towards this niche asset class becoming institutionally investable. More importantly this shift will position both groups to play a leading role in defining and shaping the on-chain markets of tomorrow.”
Traditional financial institutions and crypto-native firms can benefit from this guidance in different ways, Knutson notes: “Traditional institutions gain comfort from clearer regulatory coordination, while crypto-native firms benefit because the rules are becoming more operationally realistic and less adversarial than in the prior enforcement-heavy phase.
He explains that greater clarification around jurisdiction shows decreased hesitation around banks and large intermediaries: “Clearer jurisdiction should lower some of the hesitation among banks and large intermediaries, although many have already been moving in that direction. For early players in the digital assets sector, this raises the competitive bar, but it also validates the market they helped build and creates more partnership, liquidity and distribution opportunities.”
Framework limitations
The joint interpretation acts as a trial run for the Digital Asset Market Clarity Act (Clarity Act), adopting a similar regulatory posture while Congress works to pass the final statute. The framework sets out an immediate regulatory structure narrowing the divide between the existing enforcement based supervision and the future codified legal structure provided by the Clarity Act. Lafferman says the guidance is certainly welcomed with the delays in passing the Clarity Act:
“But enacting the Clarity Act should still remain a high priority, as it carries the benefits of permanence brought by legislation. Firms will be able to at least rely on this framework through the end of this administration. It still remains to be seen how a new administration would view this guidance and there are reasons to believe that a new administration will not view crypto as harshly as the prior one.
“That said, as Chairman Atkins himself recently recognised, only Congress can ‘future-proof’ regulation in the crypto industry.”
Mettler argues the joint guidance’s release may risk taking urgency out of the Clarity Act legislation: “Once agencies start coordinating and giving the market more room to operate, the pressure on Congress tends to ease. This is still policy, not law, so we end up in this middle ground where firms can move forward, but without conviction.
“The longer we rely on agency guidance, the longer we delay building a durable framework. I’d argue this should increase urgency because now that we know what alignment looks like, Congress has the opportunity to solidify the legislation before further shifts occur.
“It’s a meaningful step forward but again, it’s only guidance, not law. Therefore, the framework could shift with administrations and the industry recognises this. The market would benefit further from durable legislation that gives companies the ability to build for the long term.”
Forster remarks: “The guidance provides immediate practical clarity reducing the near-term gaps the Clarity Act aims to address. However, long-term statutory codification remains important for full market certainty, especially on mature blockchain definitions, safe harbors, and permanent jurisdictional lines.
“Firms can look to this with reasonable confidence in the near term, as it represents coordinated agency positioning, and a clear tone and approach around enforcement and supervision.
“For wholesale institutional participants, this interim clarity supports business planning, and initial investment, but Congressional action will provide enduring stability and enable the asset class to scale and reach its potential.”
Williamson believes it makes it more urgent to get the Clarity Act into law, reasoning that guidance is reversible unlike law: “There’s a temptation to think because the SEC and CFTC have now issued guidance and an MoU, that the pressure for legislation has raised or has eased, and that’s not the case. The opposite is true.
“The guidance actually clarifies exactly what Congress needs to legislate, making the Clarity Act more achievable and more necessary. The timing of that we will see, because these things can take time to get through.
“The guidance is administrative and represents the current administration’s interpretation of existing law.
“A change in administration, a change in the SEC or CFTC leadership, could shift that framework again. We’ve seen that when Donald Trump came in and changed leadership for both SEC and CFTC, that changed the focus and the speed at which this stuff is going through.
“The Clarity Act addresses a core question: which assets are securities and which are commodities? And that’s important, and how these two interact in a way that would be durable across administrations.
“We hope that the foundations have been laid in the right sort of way. Joint guidance effectively roadmaps what that legislation needs to say. In some ways, the MoU is the best argument in favour of the Clarity Act, demonstrating that the two agencies can work together. As ever you plan for the guidance. That you need to build for the legislation, but don’t confuse the two.”
Conclusion
The SEC-CFTC joint guidance and MoU reflects a broader shift in US crypto supervisory approach to enhance regulatory coherence and competitiveness, as it moves from case-by-case policing towards a formalised market structure framework, classifications of assets and rules, and coordinated supervision.
Although grey areas remain — including setting out the boundary between securities and commodities and it has not been codified in legislation — the guidance functions as an immediate regulatory structure that bridges the divide between the prior enforcement based supervision and the comprehensive legal structure that Congress intends to enact through the Clarity Act.
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