Regulation is no longer fragmented! SEC and CFTC join forces to promote Project Crypto and jointly establish asset classification

The US SEC and CFTC Sign Memorandum of Understanding to End Regulatory Turf Wars, Collaborate on Cryptocurrency Classification and Innovation Exemptions, Providing Greater Market Certainty.

SEC and CFTC Sign Memorandum of Understanding, Announcing End of Regulatory Turf Battles

The two major US financial regulators, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), are entering an unprecedented cooperation turning point. During a joint agency event on January 29, SEC Chair Paul Atkins and newly appointed CFTC Chair Mike Selig jointly announced that they will sign a Memorandum of Understanding (MoU) to formally establish a coordinated regulatory framework for the cryptocurrency industry.

• Selig emphasized that the CFTC will officially join the “Crypto Project” initiated by the SEC in July 2025, aiming to eliminate the long-standing “regulatory fragmentation” criticized by the market through cross-department collaboration, and reduce the economic costs for businesses caused by duplicated compliance.
• Atkins stated that the long-standing “turf war” must give way to a new era of cooperation. Both parties will use all means to reduce friction and harmonize definitions, providing necessary certainty for market participants.

This significant policy shift marks an important milestone in the Trump administration’s strategy to position the US as the “Global Crypto Capital.” Unlike the previous Biden administration SEC Chair Gary Gensler’s more enforcement-oriented regulatory style, the new leadership demonstrates a more “pro-innovation” stance. Atkins pointed out that while legislation is the best long-term solution, regulators can take action using existing powers before Congress finalizes legislation, and even consider providing “innovation exemptions” for new technologies to accelerate the entry of new tokens and technologies into the market.

Two Major Agencies Collaborate on Asset Classification, Actively Promoting Innovation Exemptions and Market Reforms

One of the core missions of the “Crypto Project” is to establish a clear taxonomy for crypto assets, addressing the long-standing jurisdictional disputes over which assets are securities and which are commodities.

According to Selig, the CFTC will collaborate with the SEC to co-develop this classification system, clearly distinguishing digital commodities, collectibles, and non-security instruments. In terms of division of responsibilities, the SEC is expected to focus on the regulatory structure for tokenized securities, while the CFTC will oversee digital assets considered as commodities. This collaborative model aims to ensure that no assets fall into a legal vacuum due to blurred regulatory boundaries.

Additionally, Selig has set an ambitious transformation agenda for the CFTC, including promoting responsible deployment of qualified tokenized collateral, integrating new derivative products such as perpetual contracts into compliant industries, and establishing clear “safe harbor” provisions for software developers. To meet retail investor needs, the CFTC is even planning to explore a new designated contract market (DCM) registration category tailored for retail leverage, margin, or financing crypto asset trading.

Regarding the recent surge in prediction markets, Selig has instructed staff to withdraw previous regulations prohibiting political and sports contracts, planning to establish clear standards to provide regulatory certainty for platforms like Polymarket. Although Bitcoin ($BTC) is currently fluctuating around 82,900 and Ethereum ($ETH) around 2,750, the proactive stance of regulators has injected confidence into the modernization of digital asset infrastructure.

This content is summarized by Crypto Agent from various sources, reviewed and edited by “Crypto City.” It is still in the training phase and may contain logical biases or inaccuracies. The content is for reference only and should not be considered investment advice.