Crypto markets have been wobbling, and the people who police them are saying the obvious: clearer rules would help. That sounds comforting until you remember the people writing the rules may not be the ones who end up enforcing them.
Over the past 30 days Bitcoin and Ether fell by more than 28% and 40%, respectively, and that kind of volatility sharpened a recurring complaint at ETHDenver this week: developers and investors want legal certainty, not surprise enforcement actions.
Speaking at the conference, SEC chair Paul Atkins and Hester Peirce, who leads the agency’s crypto task force, said regulators should clarify how ”tokenized securities interact with existing regulation,” a helpful line that nevertheless skirts the harder question: who should have authority over what.
”As regulators, the best thing we can do is to ensure that the rules governing the asset classes we regulate enable people to have the information they need to express their market sentiments through decisions about whether to buy, sell, or hold the assets at issue.”
Paul Atkins, SEC
A jurisdictional tug-of-war with real stakes
The debate matters because it’s not academic: a bill moving through the US Senate, called the CLARITY Act when it passed the House of Representatives in July, could hand much of the SEC’s authority over digital assets to the Commodity Futures Trading Commission. That would change the rules of the road for token issuers, exchanges, market makers, and investors.
But the CFTC is not exactly bursting with staff. Michael Selig, confirmed as a commissioner and chair of the CFTC in December, remains the sole leader at an agency intended for five commission members. Some lawmakers have pushed for language requiring at least four commissioners to be confirmed before the law can take effect, a tacit acknowledgement that operational capacity matters as much as legal authority.
Why clarity is harder than it sounds
There are three reasons this moment is trickier than a simple call for rules.
First, the United States lacks a single, settled framework for classifying digital assets. Regulators here have long relied on tests and enforcement actions rather than bright-line statutes. That approach has produced case law and guidance bits – useful to lawyers, less so to builders who want a predictable checklist before launching products.
Second, jurisdictional swaps are messy. Shifting authority from one regulator to another doesn’t just move papers; it changes enforcement priorities, disclosure standards, and often the commercial model that operators can use. Products that look fine under one regime may be verboten under another.
Third, global competitors are already moving. The EU’s Markets in Crypto-Assets framework created a regulatory baseline across member states, and jurisdictions such as Singapore and the UK have published clearer licensing paths for exchanges and custodians. Firms deciding where to base new offerings can and will follow clarity – not speeches.
Who wins, who loses
If Congress passes a bill that reallocates authority, short-term winners could include incumbents that have already built compliance teams and can absorb new rulebooks. Large exchanges and banks prefer regulated certainty; they can scale legal costs across huge volumes.
Startups, niche issuers, and experimental DeFi projects are the obvious losers in the near term. They operate on thinner margins and rely on interpretive space to innovate – a shift to a regulator with different tools or a sudden requirement for multiple commissioners to be confirmed before rules take effect would tighten that space.
What the regulators are missing
Atkins and Peirce framed the problem as one of clarity – information for market participants to express sentiment. That’s true, but it’s incomplete. Clarity needs firm definitions, transitional rules and safe harbors, and a realistic implementation timeline tied to agency capacity.
Congressional fixes that change institutional ownership of the rulebook without funding or staffing the new steward are half measures. Asking the CFTC to take on a vastly expanded remit while it remains under-resourced is like asking a small fire department to manage a new high-rise district overnight.
How this plays out
Expect three parallel tracks.
One: continued public messaging from both agencies promising clarity and cooperation. Those statements soothe markets, but they don’t replace rules.
Two: legislative jockeying. Senators and staff will haggle over conditional triggers, confirmation thresholds, and carve-outs for different asset types. The final text will matter much more than the rhetoric at conferences.
Three: market migration. Firms that want certainty will increasingly favor jurisdictions with explicit frameworks. We may see more token listings and institutional services set up outside the US if domestic regulation remains ambiguous or slow to arrive.
Verdict and advice
The SEC’s promise to clarify is necessary but insufficient. What the industry needs now are concrete timelines, transitional safe harbors, and a realistic match between new responsibilities and agency capacity – whether at the SEC or the CFTC. Without those, the noise from market moves will keep drowning out any helpful signal.
For founders: build for multiple outcomes and document compliance decisions. For investors: assume regulatory risk remains elevated and diversify jurisdictional exposure. For lawmakers: if you reassign authority, fund the new steward and set a phased timeline. Regulation without operational muscle is theater – and markets are starting to notice the props.