The Securities and Exchange Commission and Commodity Futures Trading Commission have launched Project Crypto, a joint initiative aimed at ending years of jurisdictional conflict over digital asset oversight.
SEC Chairman Paul S. Atkins and CFTC Chairman Michael S. Selig announced the project at CFTC headquarters in Washington, D.C. on Thursday, saying it was intended as preparation for potential bipartisan market structure legislation from Congress.
“The turf war of years gone by must give way to a new era of cooperation,” Atkins said during the event. “Our job as regulators is to apply the minimum effective dose of regulation, no more, no less.”
The initiative establishes aligned standards for trading, clearing and custody, areas where differing SEC and CFTC requirements have been cited by market participants as a challenge. Under the previous administration, the agencies often disagreed over token classifications, with the SEC asserting securities law jurisdiction over many tokens while the CFTC maintained jurisdiction over commodities.
A taxonomy for digital assets
Project Crypto introduces a common framework distinguishing between digital securities, digital commodities and digital tools. Selig directed CFTC staff to work with the SEC on codifying rules where tokens sold as part of investment contracts are not automatically classified as securities.
“Most crypto assets trading today are not securities,” Selig stated.
The initiative also addresses perpetual derivatives, products without fixed maturity dates that have migrated to offshore venues. The CFTC intends to create pathways for these contracts to trade domestically under new safeguards.
Preparing for legislation
Both agencies are developing implementation roadmaps to manage the transition once Congress passes market structure legislation. The project emphasises “substituted compliance,” under which firms could meet a single set of standards instead of maintaining multiple registrations.
Safe harbours for software developers represent another priority, with the agencies stating that they will not hold code writers responsible for user actions on decentralised protocols.
“Operation Chokepoint 2.0 is history, regulation by enforcement is dead,” Selig said, referencing what industry participants described as coordinated efforts to restrict crypto firms’ banking access.
