From "Guessing Game" to "Temporary Rules": A Decade of Absurdity in Crypto Regulation

Original author: Thejaswini M A

Original compilation: Block unicorn

On March 17, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) issued the rulebook that the crypto industry has been waiting for since 2013. I’m relieved about this, and I’m working to make it happen.

Bitcoin is down 44% from its October high. Ethereum is around $2,000—less than half of what it was less than seven months ago. The total market capitalization of altcoins has already evaporated $470 billion since its peak. The Fear and Greed Index hit 11. This isn’t 11 on some bad week—this is 11 out of 100. That means people are no longer arguing about where the bottom is; they’re starting to sell the remaining crypto.

And just then, on March 17, the U.S. SEC and the CFTC released a document that finally reveals what tokens you actually hold. Before that, both sides went through a decade-long lawsuit, hundreds of enforcement actions, and billions of dollars in legal fees. Some companies even chose to move to Singapore rather than continue playing guessing games with Gary Gensler. And in the week when Ethereum’s price finally slipped below $1,900, the answer was revealed.

The key, though, is that while the token economy itself has taken a severe hit, everything underneath it is thriving. The circulating supply of stablecoins has surpassed $316 billion, and the scale of on-chain real-world assets (RWA) has reached $26.5 billion—and it’s still growing. That’s exactly why Morgan Stanley is building a crypto trust bank. Meta dropped its metaverse project, but it’s bringing stablecoins to WhatsApp. Stripe is processing $400 billion in stablecoin transactions. Nasdaq is building a tokenized stock trading platform. Crypto is becoming a pillar of global finance, and in most cases, it doesn’t rely on tokens.

Crypto is no longer just a speculative asset class. The regulatory policy introduced on March 17 was originally meant for the first generation of crypto, but it only moved into formal implementation after the second-generation era had already arrived.

But that doesn’t mean it’s meaningless.

SEC Chair Paul Atkins once said: “We are no longer the ‘Committee on Securities and Everything.’” Does that sound a bit late?

U.S. regulators have, for the first time, provided a unified definition of crypto assets. Five categories—each token falls into one of them. Next, I’ll give these definitions, so please read them with the mindset you’ve never had these concepts before.

Digital commodities are the main event. A digital commodity is a crypto asset whose value comes from the programmatic operation of a well-functioning crypto system and the dynamics of supply and demand. Its value does not rely on management by a central issuing entity. If the network is truly decentralized and operating properly—if no company supports it—then the asset is a commodity. This move is governed by the U.S. Commodity Futures Trading Commission (CFTC), not the U.S. Securities and Exchange Commission (SEC).

Sixteen mainstream tokens, including Bitcoin, Ethereum, Solana, XRP, Cardano, Avalanche, Polkadot, Chainlink, Dogecoin, and Shiba Inu, have been formally recognized as digital commodities. Dogecoin and Shiba Inu fit this definition because no initiator or organization is driving the growth of their value. They make no promises, no roadmaps, and no continuous work by a team is essential to the token’s value. That’s why they’re viewed as commodities rather than securities. The criterion is whether someone is promising that you’ll receive returns based on their work outcomes.

Digital securities refer to tokenized stocks, bonds, and U.S. Treasury notes. In short: before being put on a blockchain, these assets are securities; after that, they are still securities. The U.S. Securities and Exchange Commission (SEC) is responsible for regulating these assets. That’s it.

Digital collectibles refer to NFTs tied to specific items or experiences. Digital tools refer to assets used to access software or services that do not expect investment returns. Stablecoins have their own category under the GENIUS Act framework.

Staking, mining, and airdrops have all been approved. The ruling explicitly states that receiving mining rewards, participating in on-chain staking, or receiving airdrops of digital commodities do not constitute securities transactions. This eliminates one of the biggest legal risks that proof-of-stake networks have faced since the Gensler era. Wrapping non-securities tokens has also been approved.

These 16 named tokens are all foundational infrastructure, backed by years of decentralized development history. DeFi protocol tokens—for example, JUP, POL, METEOR, and most of the tokens launched in the past two years—were not named and clearly don’t qualify. The threshold for a well-functioning crypto system with no centralized organization overseeing it is high. Most actively developed protocols can’t meet this standard. The gray areas that this interpretation is supposed to resolve are still unclear for the tokens most people actually hold.

Value must come from the programmatic operation of a well-functioning system, not from someone’s promise. This single test standard can turn a decade of ambiguity into something that compliance officers can genuinely get to work on.

There’s more to this

This announcement does not constitute a formal rulemaking process as required by the Administrative Procedure Act, and it has no binding effect as a law or formal regulation.

You’d better read this sentence again. The 68-page document we’ve been waiting for is only an interpretive release, not a law or regulation—just an institutional position statement issued by the current chairs of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), which they can withdraw at any time.

This interpretation is an official, binding agency action by the SEC and the CFTC. However, in the absence of enabling legislation, future governments can modify it. The document itself preserves each agency’s right to refine or expand its views. A future SEC chair with different political leanings can overturn the interpretation without congressional approval. The next administration wouldn’t even need a new law—just new leadership.

Atkins is well aware of this. He expressed this view on the day the release came out, calling on Congress to take action and provide more durable, clear certainty. He sees the interpretation as a transitional measure, waiting for Congress to act on comprehensive market-structure legislation. That legislation is the Clarity Act. Right now, the Clarity Act is being considered in the Senate.

The CLARITY Act

The House passed the CLARITY Act in July 2025 with 294 votes. Such high bipartisan support indicates that both sides have reached real consensus.

Then it went to the Senate and stalled.

The key obstacle to passage is the yield on stablecoins. The banking side believes that allowing crypto platforms to pay interest on stablecoin balances would lead to deposit outflows. People would take money out of their savings accounts and put it into USDC to get higher returns. Banking lobbying groups then launched their lobbying efforts. The Senate Banking Committee canceled the hearing originally scheduled for January 2026. Over the next two months, the bill made no progress.

On March 20, Senators Tom Tillis and Angela Alsobrooks confirmed a broad-based agreement on stablecoin rewards, backed by the White House. The agreement is this: passive yield on stablecoins would be banned; activity rewards tied to payments and platform usage would still be allowed. Neither side is satisfied, and compromise is usually how things like this get made.

But the yield agreement is only one of five things that need to be completed before the CLARITY Act can take effect. The timing for completing the other four legislative steps falls right in the tightest period of this year.

• Senate Banking Committee consideration; and a full Senate vote (requires 60 votes)
• Coordination with the Agriculture Committee
• Coordination with the House version
• Presidential signature

The Banking Committee’s consideration schedule is planned for late April, after the Easter recess. Senator Bernie Moreno warned that if the bill is not scheduled for a full Senate floor vote before May, digital-asset legislation may not make progress for the next few years.

In addition, the Iran war is also consuming a large share of Senate discussion time. There’s also a voter ID bill that Trump has said he wants to pass first. Provisions related to decentralized finance (DeFi) remain unresolved; Senate Democrats are concerned about illegal-finance risk. The ethics provisions are also not yet settled—especially whether senior government officials should be prohibited from profiting from crypto assets; given the crypto held by this administration, that issue is clearly politically sensitive. Senate Republicans are currently considering adding a community bank deregulation provision to the bill as a political bargaining chip, which would trigger an entirely new round of negotiations.

Recently, the U.S. House Financial Services Committee held a hearing titled “The Future of Tokenization and Securities: Modernizing the Capital Markets.” Witnesses included Kenneth Bentsen of the Securities Industry and Financial Markets Association (SIFMA), Summer Mersinger of the Blockchain Association, Christian Sabella of the Depository Trust & Clearing Corporation (DTCC), and John Zecca of Nasdaq. Nasdaq and the New York Stock Exchange are both building tokenized stock trading platforms. DTCC handles current settlement. If DTCC recognizes the efficiency of the blockchain, then this debate is effectively over.

So building the infrastructure is based on a rulebook that might not exist two years from now. This is the industry’s dilemma right now. Each company is making decisions worth billions of dollars to build custody systems, tokenization platforms, and staking infrastructure—all of them based on a persuasive interpretive document that has no legal force.

What’s meant to be permanent, and what isn’t

For readers holding the 16 tokens above (such as ETH, SOL, and XRP), because of statements from the two heads of the regulatory agencies, these tokens are now formally recognized under U.S. law as digital commodities. As long as these two officials—or their successors—continue to maintain that recognition, this classification will keep applying.

If the CLARITY Act passes, it becomes law. Any future chair has no authority to overturn it without congressional approval. The listed assets would be defined permanently, and the classification standards would be binding.

If it hasn’t passed by May, then the current classification system will only depend on the opinion of a single government department. Right now, the 16 named assets are temporarily safe, but not all assets have been named. Most decentralized finance (DeFi), most new tokens, and any assets that are permissionless and have no clear issuer are still in a gray area—and this problem was not explicitly clarified in the earlier interpretation.

The most exciting line is still like a draft written in pencil.

Someone needs to pick up a pen to make it official. Everything hinges on what happens in the next six weeks in the Senate. Will these rules last long enough for all of this to become meaningful?