The U.S. Congress is moving toward a clear delimitation between commodities and securities in crypto markets, with bills such as GENIUS and CLARITY and a Senate draft directly influencing the division of powers between the SEC and the CFTC. The legal definition of these assets is central to institutional adoption and investor protection. Three initiatives articulate the framework that aims to resolve years of regulatory uncertainty.
Three initiatives articulate the framework that aims to resolve years of regulatory uncertainty. The GENIUS Act — signed July 18, 2025 — creates a specific federal regime for payment stablecoins, expressly excluding them from the categories of security and commodity and subjecting them to banking supervision and 1:1 reserve requirements.
The text limits issuance to authorized entities called “permitted payment stablecoin issuers” (PPSIs); in one sentence, a PPSI is the entity authorized by a federal regulator to issue payment stablecoins under prudential and operational requirements. This approach places stablecoins under a bank-style framework and carves them out of securities and commodities law.
The Digital Asset Market Clarity Act (CLARITY Act), passed by the House in July 2025 and now awaiting action in the Senate, proposes reclassifying the majority of tokens as “digital commodities”, moving their oversight to the CFTC and reducing the SEC’s scope to assets that unequivocally meet the definition of a security. Its supporters see this as reducing uncertainty; its critics warn of a potential weakening of disclosure obligations and retail protection. The bill shifts primary oversight to the CFTC while narrowing the SEC’s remit.
The Senate Agriculture Committee draft (November 11, 2025) complements that vision, explicitly proposing that Bitcoin and Ether be considered commodities and establishing operational standards: segregation of funds, limits on mixing functions (custody, brokerage and market making) and requirements to list assets “not susceptible to manipulation.”
Regulation and compliance
The convergence of these initiatives reshuffles the regulatory burden: stablecoins under a bank-style framework; major tokens under the CFTC if CLARITY succeeds; and the SEC focused on purely securities. This redistribution aims to resolve jurisdictional overlap between the SEC and CFTC. The compliance context includes annual audits for large issuers (mentioned threshold of $10 billion in circulation), priority of holders over reserves in the event of insolvency and technological powers to freeze or seize assets for national security reasons. Audits, insolvency priority and national-security controls define the supervisory backbone.
The tension between regulatory efficiency and investor protection appears in criticisms from consumer groups and unions, which express concern about the CFTC’s ability to supervise retail platforms with the same intensity as the SEC. In addition, the proposal contemplates federal preeminence over state regulations for PPSIs, reducing licensing fragmentation. Debate centers on retail protection and federal preemption for PPSIs.
The legislative package maps a clearer regulatory landscape that could resolve the long-standing jurisdictional conflict between the SEC and CFTC and facilitate institutional entry, but it leaves open questions about the scope of investor protection and practical supervision.
