Securities Regulation Daily Wrap Up, BLOCKCHAIN—Market regulators say collaboration is key to unlocking Project Crypto, (Jan 29, 2026)

By Suzanne Cosgrove

America’s financial regulators “must modernize and harmonize their approach to regulation to future-proof our markets,” said CFTC Chairman Selig.

In remarks made Thursday at a jointly held public event, SEC Chairman Paul Atkins and CFTC Chairman Michael Selig said the agencies have embarked on a new period of collaboration, with a focus on making the U.S. a cryptocurrency trading leader.

“As SEC chairman, I am grateful to be a guest at the CFTC’s headquarters, standing side by side with Chairman Selig as we launch one of the most ambitious initiatives between our two agencies in a generation,” Atkins said. He added that a federal framework for markets “that have surged ahead with speed and ingenuity is long overdue.”

Atkins’s comments appeared somewhat serendipitous, coming on the same day the Senate Agriculture Committee advanced its version of digital asset market structure legislation. The CLARITY Act was passed by the House of Representatives last July, and Senate Agriculture Committee Chairman John Boozman and his colleagues have worked on the Senate’s market structure legislation in the intervening months. If passed, the CFTC would be granted regulatory authority over spot crypto markets and digital asset exchanges. A mark-up of the Senate bill is expected to take place next week.

“But legislation alone cannot deliver the certainty that investors and market participants deserve,” Atkins said. What is needed is the implementation of “clear and principled rules of the road” for crypto asset markets. “[Chairman Selig] appreciates, as I do, that our job as regulators is to apply the minimum effective dose of regulation—no more, no less.” “Today's markets do not divide neatly along regulatory lines,” Atkins said. “Trading, clearing, custody, risk management, now flow across asset classes, technologies, and platforms. So, fragmented regulation in an integrated market is not a safeguard for investors so much as a source of confusion among them.

“Yet for decades, we have compelled market participants to operate within a maze of overlapping and often inconsistent regulatory frameworks that reflect historical boundaries more than modern realities. That model is no longer sustainable,” Atkins said.

American 250. Heralding the U.S. as “the crypto capital of the world,” Selig declared “Operation Chokepoint 2.0” (a Biden administration regulatory initiative) is history, regulation by enforcement is dead, the GENIUS Act is law, (and) Congress is on the cusp of passing market structure legislation.

“But we cannot assume this will always be the case,” Selig added. “America’s financial regulators must modernize and harmonize their approach to regulation to future-proof our markets for the innovations of tomorrow. And, while market structure legislation will certainly advance these goals, we cannot and will not let this opportunity pass us by while Congress continues its work.

“I agree with Chairman Atkins that ‘most crypto assets trading today are not securities,’” Selig said. “But, for too long, crypto asset market participants have struggled to determine whether they are subject to regulation by the SEC, the CFTC, or both. Instead of leaving the industry trapped in uncertainty, as we witnessed under prior administrations, it is incumbent on us to draw a bright jurisdictional line for our nation’s builders and innovators.”

DCM rule directives. Following up, Selig outlined several related directives issued since he took office last month:

• He said he has instructed the CFTC staff to begin drafting rules clarifying “when leveraged, margined, or financed retail commodity transactions in crypto may be offered off exchange under an ‘actual delivery’ exception.”

• In addition, he has asked CFTC staff to begin drafting rules codifying requirements for DCMs that choose to offer these transactions on their current platforms. “Codification will promote consistency, transparency, and a uniform application of core protections across venues,” Selig said.

• Further, he directed CFTC staff to explore the creation of a new category of DCM registration that is tailored to retail leveraged, margined, or financed crypto asset trading. He said these venues would perform functions similar to those of traditional DCMs, “but operate under a purpose-fit regulatory framework.”

Tokenized collateral deployed. “With a clearer taxonomy in place, the next question becomes how blockchain technologies can be harnessed to strengthen market resilience and market functions,” Selig said.

High-quality tokenized collateral that can move seamlessly across venues has the potential to make liquidity more dynamic and markets more resilient, he said. “As on-chain capabilities mature, they also create opportunities for new tools, including artificial intelligence-driven systems and autonomous software, to interact directly with tokenized collateral.

“To achieve this work,” he said, “I have directed CFTC staff to develop rules to enable the responsible deployment of additional forms of eligible tokenized collateral.”

Clearing the deck. Selig wound up his comments by addressing the state of prediction, or event markets. “Consistent with my commitment to fostering responsible innovation in crypto asset markets, I will continue to support the responsible development of event contract markets and the important role they play in the broader financial system,” Selig said.

He has told CFTC staff to withdraw the agency’s 2024 event contracts rule proposal that would prohibit political and sports-related event contracts, and the 2025 CFTC staff advisory, which cautioned registrants about offering access to sports-related event contracts due to ongoing litigation. “While the advisory was issued at the staff level with the intent of bringing awareness to the litigation, it has instead contributed to uncertainty in our markets,” Selig said.

Instead, CFTC staff members have been instructed to draft event contracts rulemaking. “For too long, the CFTC’s existing framework has proven difficult to apply and has failed our market participants,” he said. “That is something I intend to fix.”

Selig said he has directed CFTC staff to reassess the Commission’s participation in matters currently pending before the federal district and circuit courts, but he did not elaborate on what that would precisely entail. “Where jurisdictional questions are at issue, the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives,” he said.

Creating regulatory harmony. Selig said he has directed CFTC staff to work with their SEC counterparts to develop a joint interpretation on Title VII definitions and draw clearer lines between certain commodity and security options, CFTC-regulated swaps, and SEC-regulated security-based swaps.

That joint guidance will allow firms to scale products responsibly and reduce the number of innovations that fall into what Chairman Atkins has aptly described as “the no man’s land” between our two agencies, Selig said.

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