SEC - CFTC “Harmonization” Event — What Chairs Atkins and Selig Just Signaled to Digital Asset Markets

Key Takeaways

• Harmonization agenda. The SEC and CFTC intend to align definitions, coordinate oversight, and enhance data sharing to eliminate duplicative or conflicting obligations for economically similar activities.
• Minimum‑effective‑dose regulation. The Chairs emphasized narrowly tailored, risk‑based rules that reflect integrated, on‑chain trading, clearing, settlement, and custody.
• Sequencing, not stacking. Market participants should expect phased implementation roadmaps and clear on‑ramps rather than layering of requirements.
• U.S. competitiveness is an explicit objective. A predictable framework is intended to keep innovation and liquidity onshore while preserving investor and customer protections.

What the Chairs Said and Why It Matters

Chair Atkins framed Project Crypto as a joint SEC-CFTC initiative designed to reduce friction immediately and to position both agencies to implement any Congressional market‑structure legislation “faithfully and thoughtfully.” His remarks stressed clear, principled “rules of the road,” aligned standards and definitions where appropriate, and a shift from ad hoc enforcement‑first policymaking to transparent rulemaking and guidance. This philosophy signals greater predictability for venue operations, product design, and disclosures, especially in markets where trading, clearing, settlement, and custody are technologically integrated.

Chair Selig used his first public remarks to set out a detailed CFTC agenda built around harmonization and modernization. He underscored the economic costs of fragmentation, especially in on‑chain markets, and committed to frameworks that reduce duplicate registrations and conflicting obligations. Importantly, he previewed specific rulemakings and policy tracks the CFTC will pursue in concert with the SEC, paired with a commitment to joint definitions work, substituted‑compliance concepts where feasible, and standardized surveillance data.

Together, the remarks point to a near‑term pipeline of proposals that will clarify taxonomy, rationalize cross‑agency requirements, and open compliant pathways for new and existing products.

Near‑term Agency Initiatives the Chairs Previewed

• Shared crypto asset taxonomy. The SEC and CFTC intend to converge on a common, practical taxonomy that distinguishes digital securities from digital commodities and other token types, with potential joint codification as an interim step while Congress advances legislation. Both Chairs agreed that many digital assets are not securities under current law, underscoring the need for a clear taxonomy to delineate SEC vs. CFTC oversight.
• Tokenized collateral. The CFTC will move to enable responsible use of additional forms of eligible tokenized collateral to support liquidity, margin efficiency, and real‑time risk management in 24/7 markets.
• Onshoring perpetuals and other novel derivatives. The CFTC will use existing tools to permit “true” perpetuals and similar products to trade onshore, across centralized and decentralized venues, under transparent safeguards.
• Safe harbors for software and infrastructure. The CFTC will explore clear, unambiguous safe harbors and potential innovation exemptions for software developers and non‑custodial/on‑chain interfaces, recognizing distinctions between code and intermediated activity.
• Retail leveraged crypto trading. The CFTC will draft rules clarifying when leveraged, margined, or financed retail crypto transactions can occur off‑exchange under “actual delivery,” codify venue requirements for such products, and explore a new DCM (designated contract market) category tailored to retail leveraged crypto.
• Prediction markets (event contracts). The CFTC will withdraw prior efforts that fueled uncertainty and proceed to an event‑contracts rulemaking to establish clear, durable standards.
• Title VII definitions. The SEC and CFTC will work on a joint interpretation regarding definitions under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which would draw clearer lines between certain commodity and security options, CFTC-regulated swaps, and SEC-regulated security-based swaps and allow market participants to scale products under the clearer guidance and reduce the number of innovations that fall into regulatory “no man’s land” due to inaction by one or both agencies.
• Super-Apps. Chair Selig noted that market participants should be able to offer multiple products through a single platform without navigating an inefficient patchwork of registrations and overlapping regulatory regimes, which echoes support for super-apps by Chair Atkins in an earlier speech.

What to Watch Next

• Joint or parallel agency actions. Requests for information, concept releases, pilot frameworks, and proposed rules that operationalize the roadmap previewed today.
• Sequenced implementation. Phased compliance timelines, time‑bound on‑ramps, and joint statements clarifying near‑term pathways under existing law.
• Congressional overlay. Market‑structure and related legislation could accelerate or recalibrate interim steps; the agencies signaled readiness to implement promptly.
• Enforcement baseline. Anti-fraud, anti-market manipulation, investor protections will remain the focus by both agencies alongside harmonization.

Looking Ahead

This event marks a clear pivot to coordinated, risk‑based oversight that reflects how digital asset markets actually operate. The SEC and CFTC are signaling near‑term proposals and pilots to align definitions, modernize venue and product requirements, and reduce duplicative obligations while preserving strong market and investor protections. Firms that move early on data readiness, control enhancement, and rulemaking engagement will be best positioned to benefit from sequenced transitions to a harmonized U.S. digital assets framework.

¹The complete video recording of the event is available here.