Urgent Call for Cryptocurrency Legislation
Amid a rapidly evolving digital asset landscape, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have called upon Congress to urgently adopt legislation to enhance market structure for cryptocurrencies. On January 29, 2026, SEC Chair Paul S. Atkins, alongside CFTC Chair Michael S. Selig, revived Project Crypto—a joint initiative designed to streamline the oversight of digital assets as they increasingly rely on blockchain technology.
Need for a Clear Regulatory Framework
This appeal comes at a critical time when lawmakers are reviewing bipartisan proposals aimed at defining a clear regulatory framework for cryptocurrency markets. In a united statement, both leaders emphasized the need for both legislative measures and a collaborative approach between federal agencies to ensure effective regulation of these complex markets.
Goals of Project Crypto
Project Crypto is envisioned as a necessary program to prepare financial markets in the U.S. for the complexities involved in trading and settling digital assets. The regulatory heads pointed out that as crypto markets transition to on-chain operations, it is essential for agencies to refresh their regulatory practices and enhance their surveillance methods.
A primary goal of this initiative is to foster cohesive regulation among regulatory bodies to eliminate redundancy and confusion that has arisen from fragmented oversight. The chairs stressed that vague regulations and an enforcement-heavy stance have stifled innovation while limiting opportunities for potential investors. They advocated for a more precise regulatory environment that promotes clarity and efficient enforcement.
Proposed Regulatory Approach
In their proposal, Atkins and Selig recommended that regulatory requirements be introduced in a sequenced manner rather than overwhelming the industry with simultaneous obligations. This strategy aims to create smoother pathways for compliance among market participants. They highlighted a tailored regulatory framework focused on significant risks, rather than a one-size-fits-all approach based on outdated regulations.
Addressing Oversight Gaps
The current fragmented oversight has created gaps, particularly in on-chain markets where various functions such as trading, clearing, and custody are intertwined. The disparity in jurisdictional regulations has led to inefficient practices and a lack of clear guidance for market operators.
Project Crypto is designed to address these issues by harmonizing definitions across regulatory agencies, coordinating oversight roles, and improving data sharing practices. This aligns with the broader goal of preventing duplicative registration requirements for similar products, making it easier for firms to operate within the regulatory structure.
International Competition and Regulatory Concerns
The regulatory chairs also expressed concerns about international competition for digital asset activities, noting that some global jurisdictions are adopting lighter regulatory frameworks, while others impose stringent regulations that may hinder market growth. Both Atkins and Selig cautioned that excessively restrictive regulations could unintentionally push innovation and investment to more favorable regulatory environments elsewhere.
Call to Action for Congress
In light of this pressing need for a cohesive regulatory framework, Atkins has urged Congress to expedite the passage of the CLARITY Act and associated market structure legislation. Both chairpersons highlighted the importance of accompanying any legislative measures with well-coordinated implementation strategies to ensure clarity in the regulatory landscape. Instances of registration, disclosure, custody, clearing, and surveillance have been marked as key focus areas for immediate action.
The commitment to Project Crypto signals a significant push towards establishing a robust and adaptable regulatory framework capable of supporting the burgeoning digital economy, reiterating the urgency for Congress to act swiftly on legislative reform for the crypto market.
