Crypto Lobby Hits SEC-CFTC Plan Over Commodity Test

A joint SEC-CFTC proposal on when a digital asset qualifies as a commodity drew sharp pushback from crypto industry groups Friday. The Blockchain Association and Coin Center filed comment letters arguing the test gives regulators too much discretion and could let the SEC expand its oversight of tokens that should fall under CFTC rules alone.

Classification governs which agency enforces disclosure, trading, and custody standards. Under the draft, assets with "sufficient decentralization" remain commodities. The criteria rely on subjective metrics like voting power and founder holdings, the letters said. One lobbyist called the framework "a recipe for regulatory creep."

The SEC declined to comment. The CFTC said the proposal aims to reduce regulatory uncertainty. Lobbyists said the opposite is likely. The debate comes amid a broader push for clearer rules.

A 60-day comment period ends in April. The final rule could reshape how exchanges list tokens and which assets qualify for lighter CFTC oversight.