Over the past decade, the U.S. cryptocurrency industry has remained in a peculiar state.
The market size has grown to the trillions of dollars, but a comprehensive regulatory framework has yet to be established. Two core questions have remained unanswered:
- What exactly are crypto assets?
- Who is responsible for regulation if issues arise?
These seemingly simple questions have long been the root of confusion in U.S. crypto regulation.
In recent months, the regulatory landscape has begun to send new signals—these questions are being reconsidered.
The Fog of Regulation
Within the U.S. financial regulatory system, crypto assets have historically fallen between two major agencies: the 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 problem is that crypto assets often exhibit characteristics of both. Some tokens have fundraising features and appear to be securities. Others resemble digital commodities or online resources.
As a result, for many years, the U.S. crypto industry faced a key uncertainty: the same asset could be interpreted under two different regulatory regimes. This situation is often referred to by industry insiders as “regulatory fog.”
Companies often find it difficult to determine which set of rules applies to a given product. In some cases, they may need to comply with two regulators simultaneously.
This regulatory conflict impacts more than just legal compliance; it directly influences business decisions. SEC Chair Paul Atkins has publicly acknowledged that regulatory conflicts, overlapping registration requirements, and differing rule sets have, to some extent, stifled innovation and prompted some market participants to move to other jurisdictions.
In other words, internal disagreements within the U.S. regulatory system are undermining its attractiveness to the crypto industry.
How Are Crypto Assets Classified?
For a long time, U.S. federal securities law did not have a specific concept of “crypto assets.”
Regulators typically rely on the Howey Test to determine whether an asset is a security. This test assesses whether a transaction constitutes an investment contract. Simply put, if investors put in money and primarily rely on others’ efforts to generate profits, the arrangement may be deemed a security.
This standard has been the core of U.S. securities regulation for decades. But applying this logic to crypto assets has introduced complexities.
Some tokens clearly have investment attributes. Others are more like digital usage tokens. Still, some are merely digital collectibles.
Within the same market, assets can have entirely different natures.
Faced with this complexity, the SEC proposed a new regulatory approach in November 2025. SEC Chair Paul Atkins announced that the SEC is developing a four-category classification framework based on the Howey Test. This framework divides digital assets into four types:
- Digital commodities or network tokens
- Digital collectibles
- Digital tools
- Tokenized securities
This classification marks the first systematic acknowledgment by U.S. regulators that not all crypto assets are securities.
Who Regulates?
Even as asset classifications become clearer, another question remains.
If certain tokens are deemed digital commodities, who has regulatory authority over them?
In the U.S. financial system, the primary regulator of commodities is the CFTC. This means that once some digital assets are classified as commodities, regulatory authority no longer rests solely with the SEC.
This has been a longstanding institutional conflict between the SEC and CFTC over jurisdiction.
The Fog Begins to Lift
Recently, signs of easing this long-standing regulatory dispute have emerged.
The SEC and CFTC announced the signing of a Memorandum of Understanding (MOU), committing to enhanced coordination in several areas, including:
- Crypto asset regulation
- New digital asset products
- Investor protection
- Federal policy frameworks
While the MOU itself is not legally binding, it sends a clear signal: U.S. regulators are beginning to address the long-standing jurisdictional conflicts.
Both agencies also proposed a key goal—to establish an “adaptive regulatory framework.”
This suggests that the U.S. may move away from simply applying traditional financial rules directly to digital assets, instead designing more suitable regulations for this emerging market.
Behind this shift lies a broader macro context.
In recent years, major global financial centers have accelerated efforts to build digital asset regulatory systems. Some regions have introduced unified regulatory frameworks, while others attract crypto companies by clarifying rules.
Compared to these, the U.S., despite having the largest crypto market, has a long-standing fragmented regulatory system. Increasingly, companies are choosing to operate in jurisdictions with clearer regulations. For the U.S., this trend is clearly undesirable.
Meanwhile, the structure of the crypto market itself is changing.
Early crypto industry focus was primarily on native crypto assets, but now the fastest-growing sectors are stablecoins and RWA (Real-World Assets). USD-backed stablecoins typically hold assets like U.S. Treasuries as reserves; RWA involves tokenizing traditional financial assets directly.
This indicates that crypto finance is gradually integrating into traditional finance. As these sectors converge, regulatory frameworks will need to adapt accordingly.
A New Regulatory Structure
Viewing these developments collectively, it appears that the U.S. regulatory system is undergoing a structural overhaul.
- The first step is to clarify the basic classification of digital assets.
- The second is to coordinate the boundaries of authority among different regulators.
- The third may be to establish a unified federal digital asset market framework.
If this process is completed, the U.S. will have a comprehensive digital asset regulatory system.
From a broader perspective, this regulatory restructuring is not only about the crypto industry itself but also about who will set the rules for the future financial system.
As stablecoins, tokenized assets, and on-chain finance develop, digital assets are increasingly becoming part of the new financial infrastructure.
Regulators worldwide are asking the same fundamental question: in the digital financial era, who will create the rules?
The current regulatory adjustments in the U.S. are part of this global competition.
As rules become clearer, the crypto industry may move into a new phase, emerging from long-standing regulatory uncertainty.
This content is for informational purposes only and does not constitute investment advice. Markets carry risks; invest cautiously.
