A look at the increasing complexity of the operating environment for crypto companies in the US, as a regulatory turf war between the SEC and the CFTC escalates
Joel Khalili / Wired :
Context & Ripple Effects
The jurisdictional fight over crypto has been building for years: back in 2017 both the SEC and CFTC acknowledged their limited powers over digital assets, and regulators conceded in 2018 they lacked authority over exchanges vulnerable to price manipulation. The vacuum invited lobbying — in 2022 Sam Bankman-Fried and other executives were pushing to be regulated by the CFTC rather than the SEC, betting on the smaller futures-focused agency.
The SEC's response was to regulate by other means: by early 2023 it had issued dozens of enforcement actions critics say let it shape crypto without formal rules. With both agencies now actively claiming the space, the Wired piece frames the result — a company can face two supervisors with overlapping claims and no settled rulebook.
First-order effects
- US crypto companies now face dual exposure: the SEC treats many tokens as securities via enforcement actions, while the CFTC claims derivatives jurisdiction, so a single platform must satisfy two agencies with divergent definitions of what it sells.
- The CFTC itself is stretched thin — later reporting describes staff describing chaos, cutbacks, and paranoia as the agency absorbs new crypto duties, meaning even the favored regulator lacks capacity to deliver clear oversight.
Second-order effects
- Companies that once courted the CFTC get caught in the middle of its rivalry with the SEC, forcing them to spend on parallel legal and compliance operations or to structure products around whichever agency's definition fits best.
- Jurisdictional ambiguity pushes exchanges and issuers toward jurisdictions with single, explicit regimes, draining activity from US venues until domestic rules catch up.
Third-order effects
- If the pattern holds, US crypto policy stays shaped by agency competition and case-by-case enforcement rather than legislation, leaving classification decisions — security or commodity — effectively made one lawsuit at a time.
- The endgame depends on Congress arbitrating the turf line between the two agencies; without it, regulatory complexity becomes a permanent cost of doing crypto business in the US and an argument for relocating it.
The trend: US crypto oversight is consolidating into a contested two-agency regime in which jurisdiction itself, not any single rule, is the binding constraint on companies.