Who Regulates Crypto: SEC or CFTC?

U.S. federal oversight of digital assets is divided between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Which agency applies depends on how a token is classified under existing law. That classification has been the subject of litigation and regulatory debate for years.

The SEC enforces securities laws that require registration and disclosure when companies sell securities. Regulators use the Howey Test to decide whether a token is an investment contract. The test asks whether there is an investment of money in a common enterprise with an expectation of profit from the efforts of others. Tokens sold to raise funds where buyers expect profit from a project team commonly draw SEC scrutiny and potential registration requirements.

The CFTC regulates commodity derivatives markets, including futures, options and swaps tied to digital assets. The agency treats major tokens such as bitcoin and ether as commodities for the purpose of those derivatives. The CFTC’s authority over the actual buying and selling of commodities in spot markets is limited to policing fraud and market manipulation; it cannot impose the full registration and conduct rules it applies to derivatives venues.

A token’s regulatory character can change over time. A token sold in an initial offering may meet the Howey Test and fall under SEC jurisdiction. If the network later becomes decentralized so no single party is essential to its value, the token can come to resemble a commodity and fit within the CFTC’s scope. Utility tokens, governance tokens and hybrid designs add more complexity because they combine consumption and investment features.

Regulatory practice illustrates the split. Bitcoin has been widely treated as a commodity. Ether is generally viewed as a commodity in U.S. enforcement and market practice, though its early presale and staking features have led to more debate than bitcoin. In litigation against Ripple Labs over XRP, a court found some institutional sales were securities transactions while public exchange sales were not, creating a transaction-based distinction for a single token.

Enforcement priorities have shifted with SEC leadership. Under former Chair Gary Gensler, the SEC pursued broad enforcement actions against many token sales. Under Chair Paul Atkins, the agency moved to provide clearer categories and in March 2026 issued guidance on how securities laws apply to specific crypto activities; that guidance was coordinated with the CFTC.

Congress has proposed the CLARITY Act to write jurisdictional lines into law. The bill would define “digital commodities” as tokens whose value derives from a functioning, sufficiently decentralized blockchain and place their spot markets under CFTC oversight, while keeping tokens sold as investment contracts with the SEC. The proposal also would allow for an asset to move from SEC to CFTC jurisdiction as decentralization increases. As of mid-2026 the bill had not become law.

The split affects startups, exchanges, custodians, brokers, institutional investors and retail buyers. Token issuers must consider how classification affects registration and disclosure requirements. Exchanges must determine whether to register with one or both agencies. Firms that custody or trade assets must follow different compliance regimes depending on the asset type. Because the United States is a major market for digital assets, its regulatory choices affect market access and the rules firms follow globally.