The regulatory outlook for the digital assets industry in the United States is rapidly evolving, as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have submitted significant proposals to the White House for review.
These proposals, currently under consideration by the Office of Information and Regulatory Affairs (OIRA), represent a coordinated effort by federal regulators to establish clear rules of the road for the cryptocurrency market after years of scrutiny.
SEC Proposes New Taxonomy for Crypto Securities
On Wednesday, the SEC submitted a commission-level interpretive guidance titled “Commission Interpretation on Application of the Federal Securities Laws to Certain Types of Crypto Assets,” which aims to clarify how federal securities laws could be applied to cryptocurrencies.
According to a Bloomberg report, the framework, currently at the pre-rule stage and undergoing interagency review, seeks to establish a formal token taxonomy to determine which crypto assets qualify as securities under federal law and which fall outside of the SEC’s oversight.
The move is a far cry from the agency’s previous “regulation by enforcement” approach that has characterized much of its interaction with the digital assets market in recent years. Instead, the SEC is opting for a more formal, commission-level interpretation, providing market participants with greater legal certainty and a structured path to compliance.
The SEC’s crypto taxonomy would affect how crypto firms register with regulators, fulfill disclosure requirements, conduct operations, and engage with investors. It is also expected to draw upon established legal precedents, such as the Howey Test, but with a more sophisticated understanding of the unique characteristics of different types of digital assets.
The framework is likely to categorize cryptocurrencies by their functionality and the nature of the investment contract they represent, distinguishing among security tokens, utility tokens, and potentially other categories.
Bloomberg says that commission-level guidance does not require a commission vote and is generally viewed as more enforceable than staff-level statements. Commissioner Hester Peirce, a long-time advocate for digital asset regulatory clarity, has emphasized the importance of providing clear guidance that does not stifle the development of novel blockchain applications.
Meanwhile, since the beginning of his term, SEC Chairman Paul Atkins has prioritized digital asset regulation, saying that he prefers congressional legislation but noting the agency could proceed independently if necessary. However, the CLARITY Act, a bill aimed at establishing a sweeping crypto market structure framework, stalled in the Senate earlier this year, partly due to disputes between banks and crypto firms over stablecoin rewards. The Trump White House has been hosting meetings between the banking and crypto representatives to resolve the issue.
CFTC Chair Michael Selig Hints at Rulemaking for U.S. Prediction Markets
In tandem with the securities regulator’s move, the CFTC Chairman Michael Selig said at the Milken Institute’s Future of Finance event on Monday that the agency plans to submit a proposed rulemaking to the OIRA concerning the regulation of prediction markets.
The proposed rule, titled “Regulation of Event Markets,” is expected to address discrepancies between federal and state interpretations of prediction markets, especially their sports-related contracts. Multiple states have already issued enforcement actions against platforms like Polymarket and Kalshi, arguing that they violated state gaming and gambling laws.
The CFTC framework will provide clarity on key concerns such as consumer protection, market integrity, and potential conflicts of interest. The agency has historically taken a more cautious approach to event contracts, and the upcoming rule is likely to strike a balance between encouraging market innovation and mitigating risk.
Its focus on prediction markets is particularly relevant as decentralized platforms like Polymarket have gained popularity, offering a wide range of markets on everything from political outcomes to cultural events. The proposed rule could provide a pathway for these platforms to operate within a recognized regulatory framework, enhancing legitimacy and investor confidence.
