SEC and CFTC
The SEC and CFTC discussed the goal of harmonizing the regulatory approach to crypto asset markets and the specific steps to be taken under this heading at a joint event held in Washington on January 29, 2026. The event was postponed from its previously announced date due to inclement weather, and SEC Chair Atkins opened the session by thanking participants for their flexibility.
The main focus of the meeting was to reduce regulatory uncertainty in crypto markets, clarify the boundaries of the SEC and CFTC‘s jurisdictions, and advance interagency coordination under Project Crypto to modernize market structure. CFTC Chairman Selig emphasized in his speech that Project Crypto would now move forward as a joint initiative between the two agencies.
Project Crypto’s Common Framework
Atkins emphasized in his speech that crypto markets are no longer neatly divided along historical regulatory boundaries, with trading, clearing, custody, and risk management functions intertwined across platforms and asset classes. In his view, fragmented oversight has become a structure that generates confusion and costs rather than serving as a safety net protecting investors. He therefore argued that the era of inter-agency turf wars must end and a period of coordination must begin.
Selig, from the CFTC perspective, explained that US commodity and derivatives markets have historically been shaped by innovation, and that regulators have responded by modernizing them. He stated that crypto assets, smart contracts, and blockchain-based market infrastructure have transformed trading, clearing, collateral, and settlement processes, and that the CFTC should take the lead in this transformation with a principled and flexible regulatory approach.
In this context, Selig announced that the CFTC would move forward jointly with the SEC on Project Crypto, rather than running a separate program in parallel. He clearly outlined the goals of this partnership: clarifying the taxonomy of crypto assets, defining jurisdictional boundaries, reducing duplicate compliance burdens, and lowering the costs of fragmented oversight.
Jurisdictional Boundaries and Reducing Uncertainty
One of the most critical topics of the meeting was resolving the long-standing uncertainty over the division of responsibilities between the SEC and the CFTC. Selig stated that crypto market participants have been grappling with the question of whether it falls under the SEC, the CFTC, or both for years, and that this uncertainty has driven innovation abroad. Therefore, he said there is a need for a clear, unambiguous line of demarcation.
As one of the tools to achieve this goal, Selig referred to the crypto asset taxonomy previously proposed by Atkins. This framework opens up a distinction, such as digital commodities, digital collectibles, and digital instruments not automatically being considered securities even if sold in the context of an investment contract. Selig explained that he instructed CFTC staff to work with SEC staff to evaluate the option of converting this taxonomy into a joint rule text as an interim application while Congress completes the legislative process.
Selig also noted that swap definitions represent a significant area of demarcation in the world of crypto derivatives. He therefore stated that he had instructed CFTC staff to work with the SEC to develop a common interpretation of the definitions under Title VII. The goal is to clarify the distinction between commodity and securities options, CFTC-regulated swaps, and b security-based swaps, thereby preventing innovation from becoming stuck in an ambiguous gray area between the two agencies.
Key Regulatory Steps
Selig’s prepared remarks went beyond merely addressing harmonization at the principle level, also outlining concrete regulatory packages to be pursued by the CFTC.
Tokenized collateral and market resilience: Selig stated that high-quality tokenized collateral that can be transferred more fluidly between platforms could make liquidity more dynamic and increase market resilience. To this end, he announced that he had instructed CFTC staff to develop rules that would enable the responsible use of additional types of tokenized collateral.
Legalization of perpetual contracts in the US: Regarding perpetual contracts, one of the most widely used products in crypto derivatives, Selig said that a clear framework has not yet been established in the US. Emphasizing that there is clear market demand, he stated that the CFTC will seek ways to offer these products legally and under regulation in the US, taking an approach that supports innovation.
Innovation exemption and safe harbors for software developers: Selig said that in some cases, a limited regulatory exemption option could be considered to support innovation on the software side. He emphasized the importance of safe harbor rules that clearly define which activities do not pose a risk for software developers and reduce uncertainty. He stated that the goal of this approach is for crypto innovation to develop within the US on a legal and regulated basis.
Retail leveraged crypto trading and the distinction of physical delivery: Selig said leveraged, margined, or financed retail crypto trading would continue to exist in the market, both through registered exchanges and platforms offered outside exchanges. He emphasized that the critical distinction here is physical delivery. This distinction simply means: After the transaction, does the investor actually take control of the crypto asset, or does the asset remain only as an internal record on the platform in the investor’s name? According to Selig, without clarifying this line, market participants cannot properly understand which rules they are subject to.
Three concrete steps by the CFTC were highlighted in this context:
- The CFTC aims to prepare draft rules that provide clearer answers to the question of under what conditions an asset is considered to have been actually delivered to the investor, particularly in leveraged retail transactions offered outside of exchanges.
- For exchanges registered with the CFTC that wish to offer these products on their platforms, the aim is to tie the applicable requirements to the rule text without relying on interpretation. This will make both the regulatory standard and market practice more predictable.
- Selig also brought up the examination of a more targeted registration category that is better suited to the characteristics of retail leveraged crypto trading. The goal is to create a regulatory framework that is more appropriate to the risk and operation of the product, rather than forcing it to fit the existing exchange registration model.
Backtracking on event contracts and preparing new rules: The most notable topic of the meeting was the CFTC’s announcement of changes to its approach to event contracts (contracts contingent on whether a specific event occurs). Selig said he instructed staff to withdraw the 2024 rule proposal to ban event-based contracts ( ) with political and sports themes. In addition, he announced that a 2025 staff notice would also be withdrawn.
Selig stated that the current framework was causing problems in practice and was not sufficiently clear for market participants, and that a new rule-making process would be initiated to establish clearer and more enforceable standards for these products. He also mentioned that the Commission’s approach in ongoing cases in federal courts would be reevaluated.
Conclusion
The SEC–CFTC joint event on January 29, 2026, presented a framework linking the goal of harmonization in crypto markets to concrete topics. SEC Chairman Paul S. Atkins emphasized that the fragmented regulatory approach is not compatible with the current functioning of the market and that interagency coordination needs to be strengthened. CFTC Chairman Michael S. Selig announced that Project Crypto has now become a joint working area that the two agencies will advance together.
The meeting highlighted the need to clarify the approach to classifying crypto assets, make the boundaries of authority between the SEC and CFTC more distinct, and seek common ground between the two agencies on issues that create gray areas. On the CFTC side, signals were given for new regulatory efforts on topics such as tokenization, perpetual derivatives, the conditions under which retail leveraged crypto trading can be offered, and the preparation of clearer rules for event-based contracts. The overall picture points to a shift in focus toward defining more clearly which products should be addressed within which frameworks and reducing uncertainty, rather than imposing more rules on the market.
Disclaimer
This content is for informational and educational purposes only; it does not constitute legal advice, regulatory guidance, investment advice, or financial recommendations.
The assessments contained herein are based on public statements and analytical commentary regarding matters such as coordination between the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), the Project Crypto initiative, the delineation of regulatory boundaries, derivative products, tokenisation, leveraged retail trading, and event-based contracts. Regulatory frameworks may vary based on internal agency decisions, legislative processes, court rulings, and political developments.
Any potential regulatory steps, agency statements, or policy signals mentioned in the content do not constitute final rule texts and should not be considered binding regulations. Future steps taken by regulatory bodies may differ from the framework outlined here.
Regulatory developments concerning crypto asset markets may have unforeseeable effects on market structure, product access, investor behaviour, and corporate activities. Therefore, the analyses contained herein are predictive and evaluative in nature and do not constitute guarantees or definitive outcomes.
No information contained herein should be construed as a recommendation to buy, sell, hold, or use any digital asset, platform, or financial product. Readers are advised to conduct their own research (DYOR) and, where necessary, seek professional advice from qualified legal, financial, or regulatory experts.
The author and publisher cannot be held liable for any direct or indirect damages arising from the use of this content.
