SEC and CFTC Collaborate on Project Crypto to Harmonize Crypto Regulation

The U.S. CFTC and SEC have agreed to jointly lead a regulatory effort, dubbed “Project Crypto,” to modernize oversight of digital asset markets.

The collaboration was announced Thursday at a joint regulatory forum hosted by both agencies. Officials said the move reflects the growing convergence of financial technologies, trading platforms, and asset classes, an evolution that has increasingly blurred traditional regulatory boundaries.

SEC Chair Paul Atkins confirmed that Project Crypto will be managed collaboratively. In his remarks, he argued that existing regulatory divisions no longer reflect how modern markets actually function, calling for a more integrated approach to supervision.

Key Points

• Project Crypto will be jointly managed by the SEC and CFTC to integrate oversight of digital assets.
• The initiative formalizes cooperation that began after the agencies ended their jurisdictional standoff in September.
• New CFTC Chair Michael Selig confirmed the agency will align its crypto framework with the SEC rather than creating a standalone system.
• Regulators plan to develop a shared taxonomy clarifying which digital assets qualify as securities.
• Congress is advancing legislation on digital asset regulation, but progress has been uneven, with delays caused by the treatment of stablecoins.
• The CFTC will also revisit rules on prediction markets, withdrawing previous proposals that limited political and sports-related contracts.

Regulatory Tensions Give Way to Cooperation

The joint effort marks a significant departure from recent history. Until last year, the SEC and CFTC were publicly divided over which agency should regulate most cryptocurrencies.

Rostin Behnam, who previously chaired the CFTC, had stated that most digital tokens are classified as commodities. At the same time, former SEC Chair Gary Gensler maintained that most tokens, aside from Bitcoin, qualified as securities.

That long-running dispute began to ease in September, when then-Acting CFTC Chair Caroline Pham announced that the agencies would end their jurisdictional standoff and coordinate oversight. Project Crypto now formalizes that détente.

Atkins warned that fragmented regulation across an interconnected market creates confusion instead of protecting investors. He stressed that this underscores the urgency of a unified regulatory framework.

New CFTC Chair Sets an Early Direction

Against this backdrop, newly appointed CFTC Chair Michael Selig, who assumed office last month, outlined his regulatory priorities during one of his first public appearances.

Selig said the CFTC will not pursue a standalone crypto framework. Instead, the agency will align its work directly with the SEC under Project Crypto. He directed staff to collaborate on joint rulemaking, focusing on a shared taxonomy proposed by Atkins to clarify which digital assets qualify as securities.

Selig described the approach as an interim solution while Congress works toward comprehensive crypto legislation.

Congress Advances Slowly as Regulators Act

Lawmakers continue to debate how to structure digital asset regulation, with proposals that could expand the CFTC’s authority and formally divide oversight between agencies.

However, progress has been uneven. Earlier Thursday, the Senate Agriculture Committee advanced its digital asset bill along party lines. 

Meanwhile, the Senate Banking Committee has yet to hold a hearing. Disputes over how to treat stablecoin yields have slowed momentum.

Despite these challenges, Selig said Congress is nearing action, warning that U.S. leadership in digital assets cannot be taken for granted.

Atkins echoed that sentiment in a WSJ interview published Thursday, noting that legislative clarity remains the best long-term outcome. However, he added that regulators can still take action in the meantime under existing authority.

The Journal also reported that the SEC and CFTC plan to sign an MOU that would formally codify their cooperation.

Prediction Markets Become Part of the Regulatory Reset

Beyond crypto, Selig also signaled a shift in the CFTC’s approach to prediction markets and event-based contracts.

He directed staff to withdraw a 2024 proposal that would have prohibited political and sports-related contracts. Additionally, he rescinded a 2025 advisory that had warned firms about engaging in sports-related event contracts. According to Selig, those measures created uncertainty rather than regulatory clarity.

Interest in prediction markets has surged in recent years, with platforms such as Polymarket and Kalshi expanding rapidly during the 2024 U.S. election cycle. Former Chair Behnam had previously warned that election betting posed risks and argued such activity should be regulated at the state level.

The CFTC previously barred Polymarket from serving U.S. users over licensing issues, though that restriction was lifted last year. Under the Trump administration, several firms—including Gemini Titan, MIAX Derivatives Exchange, Polymarket US, and Bitnomial—received approval to enter the market.

Trump-backed Truth Social is also exploring prediction-market tools through a partnership with Crypto.com.

Looking ahead, Selig said CFTC staff will draft new rules for event-based contracts, highlighting the importance of establishing clearer standards. He noted that such standards are critical to providing market participants with greater certainty.