SEC's Token Classification Ignites Regulatory Dispute With CFTC Over Cryptocurrency Oversight
- SEC proposes token taxonomy framework to classify crypto assets, excluding decentralized tokens and utilities from securities under the 1946 Howey Test. - Bipartisan bills aim to shift crypto commodity oversight to CFTC, raising concerns over agency capacity amid staffing shortages and pending leadership confirmations. - Regulatory overlap between SEC and CFTC intensifies as Congress seeks cohesive frameworks, balancing innovation incentives with investor protections in evolving crypto markets.
The U.S. Securities and Exchange Commission (SEC) is moving forward with a "token taxonomy" framework designed to clarify which digital assets are considered securities. Chairman Paul Atkins highlighted the importance of striking a balance between fostering innovation and enforcing strict measures against fraudulent activities. Drawing from the 1946 Howey Test, this initiative aims to sort digital tokens into four categories based on their characteristics and uses, which would exclude many tokens from being labeled as securities, according to a
Atkins shared details of the proposal at the Federal Reserve Bank of Philadelphia's Fintech Conference, explaining that tokens linked to decentralized networks, digital collectibles,
This taxonomy is intended to simplify compliance for both developers and investors, while aligning with ongoing legislative efforts in Congress. Several bills addressing market structure are advancing in both chambers, with bipartisan proposals suggesting that oversight of digital commodities should shift primarily to the Commodity Futures Trading Commission (CFTC), as noted by
The regulatory environment is further complicated by political factors. A bipartisan Senate bill, introduced by Senators John Boozman (R-AR) and Cory Booker (D-NJ), seeks to give the CFTC authority over spot cryptocurrency trading and includes measures to boost the agency’s workforce and funding, according to
Meanwhile, Mike Selig, nominated by the Trump administration to chair the CFTC, is awaiting Senate confirmation amid slow legislative progress, as mentioned by
As regulatory frameworks continue to develop, industry stakeholders are watching for guidance on how these new rules will interact with existing laws. With the SEC and CFTC navigating overlapping responsibilities and Congress working toward comprehensive legislation, the final shape of crypto regulation is still uncertain, aiming to balance support for innovation with robust investor protections, as reported by
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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