In the U.S. financial regulatory system, crypto assets have long existed in a jurisdictional gray zone between two major agencies. For over a decade, the U.S. crypto industry has remained in an unusual state: its market size has grown to the trillion-dollar level, yet no comprehensive regulatory framework has ever been established. Two fundamental questions have remained unanswered: What exactly are crypto assets? And if problems arise, who is responsible for regulating them? Though seemingly simple, these two questions lie at the heart of the prolonged regulatory chaos surrounding crypto in the United States. Over the past several months, however, the U.S. regulatory system has begun sending a series of new signals—indicating that these two questions are now being readdressed.

Within the U.S. financial regulatory system, crypto assets have long straddled the jurisdictional boundaries between two agencies: the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The SEC oversees securities markets, while the CFTC regulates commodities and derivatives trading. The core issue is that crypto assets exhibit characteristics of both. Some tokens possess fundraising attributes and resemble securities; others more closely resemble digital commodities or network resources. As a result, for many years, the U.S. crypto industry has faced a central uncertainty: the same asset may be interpreted under two distinct regulatory logics. This situation has been widely dubbed “regulatory fog” by industry insiders.

Enterprises often struggle to determine which set of rules applies to a given product. In some cases, companies even face simultaneous scrutiny from both regulators. The impact of this regulatory conflict extends far beyond legal disputes—it directly shapes corporate business decisions. SEC Chair Paul Atkins acknowledged in a public speech that regulatory conflicts, overlapping registration requirements, and divergent rule sets have, to some extent, stifled innovation and pushed certain market participants toward other jurisdictions. In other words, internal divisions within the U.S. regulatory system are themselves eroding its appeal to the crypto industry.

For decades, U.S. federal securities law has contained no formal definition of “crypto assets.” Regulators instead assess whether a given asset qualifies as a security using the Howey Test—a legal standard for determining whether a transaction constitutes an investment contract. Simply put, if investors contribute money and rely primarily on the efforts of others to generate profits, such an arrangement may be classified as a security. For decades, this test has served as the cornerstone of U.S. securities regulation. Yet when applied to crypto assets, the analysis grows significantly more complex. Some tokens clearly carry investment features; others function more like network access credentials; still others are purely digital collectibles. Within the same market, asset characteristics can vary dramatically.

Faced with this complexity, the SEC proposed a new regulatory approach in November 2025. SEC Chair Paul Atkins stated that the agency is developing a four-category token classification framework grounded in the Howey Test. Under this framework, digital assets would be categorized into four types: digital commodities or network tokens, digital collectibles, digital utility tokens, and tokenized securities. This classification framework also marks the first time U.S. regulators have systematically acknowledged that not all crypto assets are securities.

Yet even as asset categories begin to crystallize, another question persists: If certain tokens are classified as digital commodities, who holds regulatory authority? Within the U.S. financial system, the CFTC is the primary regulator for commodity markets—meaning that once certain digital assets are deemed commodities, regulatory authority no longer resides solely with the SEC. This is precisely the longstanding institutional tension between the SEC and CFTC.

Recently, signs have emerged suggesting this enduring regulatory divide may be softening. The SEC and CFTC jointly announced the signing of a Memorandum of Understanding (MOU), pledging enhanced coordination across multiple areas—including crypto asset regulation, novel digital asset products, investor protection, and federal-level policy frameworks. While the MOU itself carries no legal binding force, it sends a clear signal: U.S. regulators are beginning to address their long-standing jurisdictional conflicts. Both agencies have also articulated a key objective—to build an “adaptive regulatory framework.” This implies the U.S. may move away from simply applying traditional financial rules wholesale to digital assets, instead designing tailored institutional structures better suited to this emerging market.

Underpinning these developments lies a broader global context. Over recent years, major global financial centers have accelerated efforts to construct digital asset regulatory regimes. Some jurisdictions have already rolled out unified frameworks; others have attracted crypto firms by establishing clear, predictable rules. By contrast, although the U.S. hosts the world’s largest crypto market, its regulatory structure has long remained fragmented. An increasing number of enterprises are choosing to operate in jurisdictions where regulatory expectations are more transparent—a trend clearly undesirable for the U.S. At the same time, the structure of the crypto market itself is shifting. While early crypto activity centered largely on native crypto assets, the two fastest-growing segments today are stablecoins and Real World Assets (RWA). U.S. dollar-pegged stablecoins typically hold reserves in U.S. Treasury securities and similar assets; RWAs involve the direct tokenization of traditional financial instruments. This means crypto finance is increasingly integrating into the traditional financial system—and as convergence accelerates, regulatory architecture must evolve accordingly.

Viewed collectively, these developments suggest the U.S. regulatory system is undergoing a structural reorganization. The first step is clarifying the foundational classification of digital assets. The second step involves harmonizing jurisdictional boundaries among different regulatory agencies. The third step may ultimately entail establishing unified, federal-level market rules for digital assets. Should this process reach completion, the U.S. will have forged a comprehensive digital asset regulatory regime. From a broader perspective, this regulatory reconstruction extends well beyond the crypto industry itself—it implicates the very authority to shape future financial rules. As stablecoins, tokenized assets, and on-chain finance advance, digital assets are gradually becoming a new financial infrastructure. Regulators worldwide are grappling with the same fundamental question: In the era of digital finance, who sets the rules? The U.S.’s current regulatory recalibration is part of this global competition—and as clarity emerges, the crypto industry may finally transition out of prolonged regulatory uncertainty and into a new phase.

This article is for informational purposes only and does not constitute any investment advice. Markets involve risk; invest with caution.

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