WASHINGTON — The Securities and Exchange Commission and the Commodity Futures Trading Commission released a long-awaited interagency framework on Tuesday that defines which categories of digital assets sit under each agency's primary jurisdiction, ending several years of explicit ambiguity that has, in practice, made compliance uncertain even for participants making good-faith efforts.
The framework does not resolve every borderline case — some are inherently dependent on facts that have to be established case-by-case — but it provides categorical guidance that covers the substantial majority of the activity participants engage in.
What the framework establishes
The framework establishes that tokens with characteristics that, on the existing legal tests, place them in the securities category are within the SEC's primary jurisdiction. Tokens with characteristics that place them in the commodities category are within the CFTC's primary jurisdiction. The agencies have committed to consistent interpretation of the underlying legal tests.
The framework also establishes a coordination process for hybrid cases — assets whose characteristics cross the categorical line or whose primary characteristics are not yet stable. The coordination process is procedural rather than substantive, but it provides participants with a defined channel through which jurisdictional questions can be resolved without requiring a full enforcement action.
What this changes for participants
For participants, the framework changes the operational risk landscape in several specific ways. Activities that have, in the past several years, been operated under one agency's interpretation while facing arguable claims of jurisdiction from the other can, under the framework, proceed with clearer regulatory comfort.
The framework does not change the underlying substantive requirements either agency imposes; what it changes is the predictability of which agency will be applying the requirements. That predictability has, on the participants' own framing, been the principal source of compliance friction in the past several years.
What the framework leaves open
The framework leaves open the question of how hybrid assets that move between categorical states should be regulated through the transition. The classic example is a token whose characteristics evolve from securities-like at issuance to commodities-like at sufficient decentralisation; whether and when the regulatory treatment changes is the kind of question the framework deliberately punts on.
Both agencies have indicated they will issue subsequent guidance on the transition question once the framework has been operating long enough to surface the practical patterns. The timing of that subsequent guidance is not specified.
The international dimension
The international dimension of the framework is a meaningful complication. Several allied jurisdictions have evolved digital-asset regulatory frameworks on different timelines and toward different specific structures. The U.S. framework's interaction with those frameworks is, in several specific cases, friction-producing.
The Treasury Department has, in parallel, been working on bilateral conversations with the most-affected jurisdictions about coordination structures. Those conversations are continuing on their own track and are expected to take additional time before producing visible outcomes.
