Joint SEC–CFTC digital-asset rule: when tokens are securities vs. commodities
Mandate says both agencies have failed with regulation-by-enforcement; they should jointly define when digital-asset holders are parties to investment contracts (SEC) versus commodities (CFTC), and amend commodity/security definitions accordingly—or Congress should legislate.
Mandate
Mandate Ch. 27 (Financial Regulatory Agencies) — Digital Assets: SEC and CFTC should clarify treatment of digital assets; promulgate a joint regulation providing a holder of digital assets may not be deemed party to an investment contract/common enterprise unless entitled to earnings/profits/defined payments while a going concern or rights against assets on liquidation—otherwise the digital asset is a commodity regulated by CFTC not SEC; amend commodity definition to include non-security digital assets and clarify commodity certificates convertible on demand are not securities; absent regulatory action, Congress should enact legislation achieving these goals.
Undo plan
1) Reject Howey-narrowing that lets capital-raising token schemes escape Securities Act registration.
2) Enact clear market-structure legislation with investor disclosures, custody standards, and interagency MOUs.
3) End regulation-by-enforcement via APA rules—but keep robust enforcement against fraud.
4) Preserve SEC jurisdiction over investment-contract token offerings with managerial efforts.
5) Verify: joint rule text; reduction in conflicting staff guidance; retail crypto fraud trends.