SEC and CFTC launch "Project Crypto" to harmonize U.S. crypto rules; CFTC chairman directs multiple staff rulemakings

WASHINGTON — The Securities and Exchange Commission and Commodity Futures Trading Commission on Monday announced a coordinated regulatory initiative, called Project Crypto, to align the two agencies’ approaches to crypto assets and digital markets.

SEC Chairman Paul Atkins, speaking at the CFTC’s headquarters, said the initiative is intended to “reduce uncertainty, lower the cost of compliance, and unleash the creative energies of a free people,” and that “project crypto will now proceed as a joint initiative between our 2 agencies.” Atkins framed the effort as preparation to implement forthcoming congressional market-structure legislation.

CFTC Chairman Michael Selig said the agency will use existing authorities to modernize oversight and seek greater harmonization with the SEC. “I’ve directed CFTC staff to make full use of the agency’s existing authorities to begin upgrading our regulations,” Selig said, adding that the agencies should “draw a bright jurisdictional line” for builders and innovators.

Selig outlined a series of CFTC staff directives. He told staff to withdraw a 2024 event-contracts rule proposal that would have prohibited certain political and sports-related event contracts and to proceed with drafting a new event-contracts rule to establish clear standards for those markets. He also directed staff to: develop rules enabling additional forms of eligible tokenized collateral; use agency tools to onshore perpetual and other novel derivative products under appropriate safeguards; draft rules clarifying when leverage, margin or financing may be offered off exchange under an actual-delivery exception; codify requirements for designated contract markets (DCMs) that choose to offer retail leverage; and explore creating a new, purpose-fit DCM category for retail leverage and margin trading.

Selig told attendees the CFTC will work with SEC staff to consider joint codification of a token taxonomy as an interim measure while Congress finalizes legislation and to develop a joint interpretation of Title 7 definitions to clarify lines between commodity and security options, CFTC-regulated swaps and SEC-regulated security-based swaps.

Both agencies emphasized that coordination does not mean consolidation. In the moderated discussion that followed, the chairs described practical tools for harmonization, including “substitute compliance” to reduce duplicative registrations, shared market data and surveillance, and joint rulemaking where appropriate. Atkins said the SEC has provided recent staff guidance on digital assets — citing Division of Corporation Finance statements and Trading and Markets FAQs — as groundwork for coordinated implementation.

The chairs stressed that while agencies have administrative authority to act, statute remains important. Atkins said legislation would help ‘‘future-proof’’ the regulatory framework so that rules do not change dramatically from administration to administration. Selig echoed that view, saying rules in statute give markets predictability and help protect against future shifts in enforcement or policy.

On industry engagement, Selig described an innovation advisory committee that will include CEOs from major digital-asset firms and exchanges. He said the committee will help regulators understand emerging business models and technological testing in the marketplace.

The session closed with both chairs saying they will seek to institutionalize cooperation through a memorandum of understanding and sustained staff-level ties so the work can continue beyond current leadership.

What happens next: The CFTC directives described by Selig are administrative actions directing staff to begin or resume rulemaking work. They do not themselves change law; any proposed rules would undergo the normal notice-and-comment and internal processes before adoption. The agencies also said they stand ready to provide technical assistance to Congress as it considers market-structure legislation.