The past 48 hours have provided a rare snapshot of the future direction of US crypto regulation. On February 12, SEC Chairman Paul Atkins testified before the Senate Banking Committee.
On the same day, Commodity Futures Trading Commission (CFTC) Chairman Michael Selig announced the formation of a 35-member Innovation Advisory Committee, whose roster is filled with top executives from the crypto industry. The day before, the Federal Reserve released a research paper proposing independent initial margin weights for cryptocurrency derivatives.
Three institutions, three tools, one direction: to formally incorporate crypto assets into the existing framework of US financial regulation.
Atkins' gamble: If the rules aren't enough, legislate.
Atkins made a thought-provoking statement at the hearing: "We need to have a solid legal foundation to prevent future setbacks."
The subtext of this statement is that the rules currently being developed by the SEC through the "Project Crypto" agenda could be overturned by the next administration at any time. The lifespan of executive orders and regulatory rules depends on who sits in that chair, while the lifespan of laws depends on Congress. Atkins is well aware that if the crypto-friendly framework established by the Trump administration remains only at the executive level, the next administration can overturn it all with just one executive order.
His CLARITY Act (Digital Asset Clarity Act) aims to address a long-standing problem in the industry: which tokens fall under the jurisdiction of the SEC and which under the CFTC? If passed, this bill will, for the first time, legally define the jurisdictional boundaries between the SEC and the CFTC over cryptocurrencies and set up regulatory safeguards for DeFi and stablecoins.
The key hurdle lies in the Senate. Democratic negotiator, Virginia Senator Mark Warner, expressed support for pushing forward at the hearing, but on the condition that decentralized finance (DeFi) not become a breeding ground for money laundering. The bill requires the support of at least seven Democratic senators, and this hurdle will be even higher if it doesn't pass unanimously within the Republican Party.
The CFTC's inner circle: Half of the crypto industry is on the list.
The list of members of the Innovation Advisory Committee, published by CFTC Chairman Michael Selig, reads like a who's who in the crypto industry.
Brian Armstrong of Coinbase, Brad Garlinghouse of Ripple, Anatoly Yakovenko of Solana Labs, Sergey Nazarov of Chainlink, and Hayden Adams of Uniswap Labs: these names cover almost every aspect of crypto infrastructure.
Exchanges include Gemini, Crypto.com, Kraken, and Robinhood; prediction markets include Shayne Coplan of Polymarket and Tarek Mansour of Kalshi; venture capital firms include Chris Dixon of a16z crypto and Alana Palmedo of Paradigm.
But the list isn't just for crypto natives. Representatives from Cboe, CME, DTCC, Nasdaq, and options clearing firms are also included. Selig's intention is clear: this isn't a self-congratulatory party for the crypto industry, but rather a platform for new and old finance to sit at the same table and jointly set the rules of the game.
There's a noteworthy political signal here. When regulators actively invite those they regulate to participate in rule-making, it usually means one of two things: either they genuinely want to hear input, or they need these individuals' endorsements to push forward what they want to do. Either way, the result is that the crypto industry's influence in Washington is becoming institutionalized.
The Fed's technical readiness: Encryption requires its own risk classification
The Fed's document appears to be the most "technical" of the three, but its policy implications may be the most profound.
The core argument of the document is simple: floating crypto assets like Bitcoin and Ethereum, as well as pegged stablecoins like USDT and USDC, have volatility characteristics that differ from interest rates, stocks, forex, and commodities, making them unsuitable for existing standardized initial margin models (SIMM). Therefore, crypto assets need their own risk categories and weights.
In other words, the Federal Reserve isn't asking "Should crypto be included in the financial system?" but rather "If included, what formula should be used to calculate the risk?" This is a tacit acceptance. When you start designing a risk management model for an asset, you've already accepted that it's part of the financial system.
The research team suggests using a benchmark index, composed of equal parts floating crypto assets and stablecoins, to simulate the volatility of the crypto market and serve as a proxy variable for calibrating margin weights. Whether this methodology will ultimately be adopted remains to be seen, but its very existence demonstrates that the Federal Reserve's technical team is already preparing for the normalization of regulation of crypto derivatives.
Prediction Markets: The Next Battleground for Jurisdiction
Atkins also mentioned at the hearing that prediction markets are a "huge issue" he and CFTC Chairman Selig are jointly concerned about. The explosive growth of platforms such as Polymarket and Kalshi has brought an old question back to the forefront: are these contracts futures, securities, or gambling?
At the federal level, the CFTC currently holds primary jurisdiction. However, some state governments believe that contracts involving sports betting or political predictions violate local betting laws. Platforms, on the other hand, argue that all event contracts should be governed solely by the CFTC under the Commodity Exchange Act, and that state governments have no right to interfere.
This jurisdictional dispute is not merely a legal technical issue, but also a philosophical debate about what constitutes finance and what constitutes gambling. Selig's statement that it will develop "reasonable rules and safeguards" for prediction markets to prevent these platforms from being pushed overseas suggests a pragmatic stance: rather than prohibiting, it's better to regulate.
The framework is taking shape, but the time window is limited.
Looking at these three threads together, the picture is clear: the United States is building a crypto regulatory framework at an unprecedented pace. The SEC is pushing for legislation, the CFTC is establishing an advisory group, and the Federal Reserve is making technical preparations; each of the three agencies is fulfilling its responsibilities, but their directions are aligned.
For the crypto industry, the question now is not whether Washington is willing to regulate, but whether this goodwill can be put into writing before the political clock runs out.
