SEC proposes new regulation for crypto assets

The two US federal agencies that spent years disagreeing about who regulates what in digital assets have spent 2026 doing the opposite. Under the banner of Project Crypto, the Securities and Exchange Commission and the Commodity Futures Trading Commission have issued joint interpretations, signed a formal coordination agreement, and, in August, produced the most significant piece of SEC crypto rulemaking the initiative has yielded so far.

What Project Crypto is

Project Crypto reflects a commitment by the SEC and the CFTC to develop a coordinated, harmonized regulatory framework for digital assets that spans both federal securities law and federal commodities law. That split has long been the structural problem in US crypto regulation: the same asset can look like a security in one agency’s framing and a commodity in the other’s, and the two bodies historically approached the question with different tools and different conclusions. Project Crypto is an attempt to settle the overlap through coordination rather than through parallel enforcement.

The initiative began as an SEC-led effort. On January 29, 2026, SEC Chairman Paul Atkins and CFTC Chairman Michael S. Selig announced at a joint harmonization event that it would proceed as a joint undertaking between the two agencies. Atkins described the resulting coordination as “unlike anything seen before at these two, often sparring agencies.”

Why the jurisdictional split existed in the first place

The underlying legal problem predates Project Crypto by years. Securities law in the United States turns heavily on the Howey test, a framework drawn from a 1946 Supreme Court case that asks whether an arrangement involves an investment of money in a common enterprise with an expectation of profit derived from the efforts of others. Applying a decades-old test written for orange groves to a decentralized token that changes hands thousands of times a day, often without any identifiable “promoter” left directing the project, produced years of inconsistent answers. The CFTC, meanwhile, has long treated commodities like Bitcoin as falling within its own jurisdiction when it comes to derivatives trading, but historically lacked comparable authority over spot markets in the same assets. A single token could plausibly be described as a security by one agency’s framework and a commodity by the other’s, and market participants were left to guess which body’s rules applied, and to which stage of an asset’s life, until an enforcement action settled the question after the fact.

The March agreements

Two things followed quickly. On March 11, 2026, the SEC and CFTC signed a Memorandum of Understanding establishing a framework for coordination on shared regulatory concerns. The MOU commits both agencies to “clarify, coordinate, and harmonize” their policies, and explicitly names the goal of providing a “fit-for-purpose regulatory framework for crypto assets.” An MOU is not a rule and does not bind market participants, but it does set out how two agencies intend to work with each other, which matters when the practical problem has been inconsistency rather than absence of authority.

Six days later, on March 17, 2026, the agencies jointly issued an interpretation of how federal securities laws apply to certain types of crypto assets and transactions. A joint interpretation is a substantive step beyond a coordination agreement: it tells market participants how the two agencies read existing law, together, on the specific question that has generated the most litigation.

Coordination has extended past the classification question as well. The two agencies have also worked together on other items, including advancing 24-hour trading.

Regulation Crypto Assets

The centrepiece arrived on August 18, 2026, when the SEC proposed new rules titled “Regulation Crypto Assets.” The proposal creates the first tailored offering regime for certain investment contracts involving crypto assets, and has been described as the most significant SEC rulemaking in the digital asset space to date under Project Crypto.

The significance is in the word “tailored.” Until now, a crypto offering that fell within securities law had to fit itself into registration and exemption frameworks built for conventional securities issuance. A bespoke offering regime means a set of rules written for the asset class itself rather than borrowed from one designed decades earlier for a different kind of instrument.

That distinction has concrete consequences for issuers. Conventional securities registration under existing SEC rules assumes a company with financial statements, a management team, and periodic reporting obligations built around a corporate structure. A crypto network or protocol often has none of those features in the same form, no single issuer to hold accountable for ongoing disclosure, no dividend or earnings concept that maps cleanly onto existing disclosure templates, and a token supply that can be distributed, burned or otherwise altered by code rather than by board resolution. Forcing that kind of asset through a disclosure framework built for corporate securities has historically produced either awkward, ill-fitting filings or, more often, projects avoiding formal registration altogether and relying on narrower exemptions instead. A regime built specifically for crypto-asset investment contracts is meant to close that gap by defining what disclosure should actually look like for this category of asset, rather than asking issuers to approximate an existing template that was never designed for it.

What is settled and what is not

An important distinction: Regulation Crypto Assets is a proposal, not a final rule. SEC rulemaking moves from proposal through public comment before anything is adopted, and the text that eventually takes effect can differ from the text that was proposed. What is already in place is the coordination architecture, the March MOU and the joint interpretation, which shapes how both agencies approach the space regardless of where the proposed rules land.

For anyone tracking crypto regulation from outside the United States, the relevant shift is less about any single rule than about the process. The US approach through 2025 was largely defined by case-by-case enforcement and jurisdictional friction between two agencies. The 2026 approach, at least on paper, is two agencies writing down what they agree on first and then proposing rules against that agreed baseline.

Why this matters beyond US markets

US securities and commodities regulation does not directly bind Canadian exchanges or Canadian investors, who answer to the Canadian Securities Administrators and CIRO rather than the SEC or CFTC. But US rulemaking of this scale still matters north of the border for a few practical reasons. A large share of the tokens, exchanges and trading infrastructure Canadians interact with either originate in, or are dual-listed with, US markets, so clearer US rules on what counts as a security tend to influence how those same assets are treated, marketed and disclosed everywhere they trade. Canadian regulators have also historically watched US developments closely when shaping their own approach, adopting some elements while diverging on others where they judge US rules too permissive or too restrictive for Canadian investors. A more settled US framework gives Canadian regulators a clearer reference point to react to, whether that reaction is alignment or deliberate divergence.

There is also a market-structure argument. Fragmented, unpredictable regulation has been cited repeatedly by crypto firms as a reason for keeping certain products, or entire business lines, out of the US market, and by extension sometimes out of North America altogether given how closely US and Canadian financial infrastructure are linked. A coordinated SEC-CFTC framework, even one still moving through the proposal and comment stage, is the kind of development that can shift where global crypto firms choose to list products, build infrastructure or seek registration, with knock-on effects for what is available to Canadian investors regardless of where the underlying rule technically applies.