Senator Gillibrand Calls for Clear Rules on Digital Assets and Firm Division Between SEC and CFTC

For years, the American crypto market has operated in a gray zone, where rules were applied through lawsuits and enforcement rather than clear statutes. Senator Kirsten Gillibrand has been one of the few lawmakers arguing that this approach cannot continue.

Her call is simple but profound: Congress must write the rules into law, define which regulator handles which part of the digital asset ecosystem, and stop forcing courts to fill the gap.

At the center of her effort is the Lummis–Gillibrand Responsible Financial Innovation Act (RFIA), a bipartisan bill that has become the blueprint for future crypto legislation.

The bill’s purpose is to draw bright lines between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), establish clear definitions for digital assets, and make compliance a matter of statute, not settlement.

Gillibrand’s work has expanded over time. Alongside Wyoming Senator Cynthia Lummis, she has pushed for related bills on market structure and stablecoins, aligning Senate and House proposals like FIT21 and the GENIUS Act under a coherent strategy for the digital economy.

Why Clarity Has Become Urgent

The crypto market sits in regulatory limbo, caught between the SEC and CFTC with no clear rulebook. Gillibrand argues that only Congress can end the confusion and create a stable foundation for growth and accountability.

The Jurisdictional Fog

The central question that lawmakers and regulators keep returning to is deceptively simple: When is a crypto asset a security, and when is it a commodity?

The answer determines who regulates it. The SEC claims authority when assets meet the Howey test for investment contracts, while the CFTC handles commodities and their derivatives. But in the crypto space, many tokens exist in between, not clearly one or the other.

The absence of statutory definitions has led to what Gillibrand calls “regulation by enforcement,” where each enforcement action becomes an unofficial precedent. That uncertainty affects product launches, exchange operations, and investment decisions across the entire industry.

Crypto users increasingly expect the same fast, seamless transactions they get from platforms reviewed on 99Bitcoins, where instant withdrawals showcase how digital assets can work efficiently in real time.

The Enforcement Numbers

The SEC’s activity illustrates the problem. Under Chair Gary Gensler, the agency brought 125 crypto-related enforcement actions through 2024, including 33 in 2024 alone. Many cases involved allegations of unregistered offerings or fraud.

Even projects that tried to comply found themselves in prolonged legal battles because the definitions themselves were unclear.

At the same time, the CFTC has repeatedly asked Congress for explicit authority over spot markets for digital commodities, a gap in current law that leaves billions in daily trading volume under partial oversight.

The Leadership Shift

Gensler’s departure in early 2025 added urgency. His successor, while maintaining investor protection priorities, has publicly called for Congress to finish what Gillibrand started, clear market-structure legislation that assigns responsibility once and for all.

Inside the Lummis–Gillibrand Framework

@yahoofinance

Senators Cynthia Lummis (R-Wyoming) and Kirsten Gillibrand (D-New York) are re-introducing their “Lummis-Gillibrand Responsible Financial Innovation Act,” which would provide a regulatory framework for the crypto industry. Both senators sat down with Yahoo Finance Live to discuss the legislation and how they say it will protect consumers while still allowing for innovation in the space. The segment is from July 12, 2023. #crypto #cryptocurrency #legislation #newyork #wyoming #responsibleinnovationact #howeytest #digitalasset #supremecourt #cryptoregulation #yahoofinance

♬ original sound – Yahoo Finance

The Responsible Financial Innovation Act is the first major bipartisan attempt to build a durable framework for digital assets. It doesn’t just create new categories; it connects them to existing law.

The bill defines key terms such as digital asset, ancillary asset, payment stablecoin, and smart contract, then integrates them into the securities and commodities statutes. It also creates specific registration and disclosure pathways for token issuers and intermediaries.

The Core Design

At a high level, the SEC would oversee tokens that represent an ownership or profit interest: essentially, securities. The CFTC would handle tokens that function as commodities or are traded in decentralized markets without equity-like claims.

Below is a simplified summary of how the proposal divides responsibilities:

The framework’s intent is to create predictability for both regulators and industry participants, so they know which rulebook applies without waiting for a court to decide.

FIT21

The Financial Innovation and Technology for the 21st Century Act (FIT21), passed by the House in May 2024, mirrors many of the same principles. It defines the SEC’s and CFTC’s jurisdictions using decentralization thresholds.

In practice, that means:

• If a network is functional and decentralized, the CFTC has authority.
• If it remains centralized or tokens are distributed through securities transactions, the SEC retains oversight.

The law’s design gives both agencies overlapping antifraud authority but distinct primary roles, reducing duplication and forum shopping.

FIT21 passed with bipartisan support, signaling that Congress is moving toward comprehensive statutory oversight rather than piecemeal enforcement.

The GENIUS Act

 

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The GENIUS Act marked the first federal framework for payment stablecoins, setting clear rules for licensing, reserves, and supervision across the U.S. financial system.

Gillibrand’s success with the GENIUS Act, signed into law in July 2025, shows that bipartisan cooperation can work in crypto legislation. The law created the first federal framework for payment stablecoins, setting:

• Licensing and registration for issuers
• Reserve and segregation requirements
• Monthly attestations and audits
• Federal and state supervisory coordination

The act’s passage was a turning point. It pulled stablecoins — a major retail use case — into a regulated perimeter that resembles traditional banking standards.

Gillibrand co-led the Senate effort and backed the final House vote that sent the bill to the President. The law’s prudential-style oversight now governs stablecoin issuers, payment networks, and custodians.

What Gillibrand Wants Congress to Do Next

With the stablecoin law complete, Gillibrand’s focus has shifted to finishing the market-structure side, the framework for everything else that isn’t a payment token.

Her priorities include:

• Finalizing jurisdictional boundaries for all non-stablecoin assets.
• Granting the CFTC statutory spot-market authority for digital commodities.
• Codifying coordination between the SEC and CFTC to prevent overlap and confusion.
• Embedding investor protection into law while ending regulation by enforcement.

Enforcement Pressure and Legal Risk

Enforcement data from Cornerstone Research’s 2024 review shows how pervasive regulatory pressure has become:

• 125 total crypto actions by the SEC through 2024
• 24 of the 33 actions in 2024 involved fraud allegations
• 19 involved unregistered offerings

The pattern is clear: the SEC’s enforcement-heavy approach filled the vacuum left by missing statutes. Exchanges, wallet providers, and DeFi interfaces have all faced action under unclear rules, reinforcing Gillibrand’s point that only legislation can deliver consistent treatment.

With a new SEC chair calling for legislative clarity and a CFTC eager for defined spot authority, Congress now faces a moment of alignment it hasn’t had in years.

How a Firm SEC–CFTC Divide Would Work in Practice

A firm divide between the SEC and CFTC would turn broad policy goals into operational reality. It would clarify who oversees which assets, how firms register, and what disclosures apply across crypto markets.

Registrations You Should Expect to Hold

Disclosure Obligations

Disclosure obligations define what information issuers and trading venues must share with the public. They set transparency standards that help regulators, investors, and users see how assets are structured, governed, and traded.

For securities-like tokens

Issuers would file disclosures similar to those required under Regulation S-K, but tailored to crypto. These include:

• Token supply schedules
• Code audit results
• Governance and voting rights
• Protocol and network risk factors

For Digital Commodities

CFTC-regulated venues would need to:

• Publish market data
• Maintain transparent rulebooks
• Prevent wash trading and manipulation

Practical Guidance for Market Participants

Market participants now need to adapt quickly. With statutory lines forming between the SEC and CFTC, every exchange, issuer, and service provider must align operations, registration, and disclosure practices to fit the emerging federal framework.

For Exchanges and Trading Platforms

• Create dual-track compliance systems. Classify each listed asset under either SEC or CFTC rules.
• Monitor decentralization changes. FIT21 provides a working test for when assets move from security to commodity status or the reverse.
• Design reclassification processes. Build internal review schedules for when project governance or token distribution models evolve.

For Token Issuers and Project Foundations

• Expect disclosure requirements. Projects that raise funds through token sales resembling investment contracts will face SEC filings.
• Plan for decentralization milestones. When control diffuses, prepare to shift to the CFTC regime.
• Leverage the ancillary-asset concept. RFIA’s definition helps projects identify the boundary between token utility and investment exposure.

For Stablecoin Issuers and Custodians

• Comply immediately. The GENIUS Act is in force. Maintain high-quality liquid reserves, segregate them from operating funds, and conduct regular attestations.
• Coordinate with state supervisors. Federal licensing complements, not replaces, state-level oversight.

For Banks and Payment Networks

• Integrate with confidence. The GENIUS Act’s structure gives traditional institutions a predictable path to participate in tokenized payment systems.
• Expect further clarity soon. Once Congress finishes market-structure rules, institutional adoption will accelerate.

Points of Debate and Remaining Questions

Not all lawmakers are aligned. Several Senate Democrats argue that the ancillary-asset framework risks classifying too many tokens as commodities, weakening investor protections.

Others worry that moving authority to the CFTC could loosen standards for disclosure and transparency.

Key questions still open for negotiation:

• How to measure decentralization. FIT21’s metrics will likely face refinement.
• How DeFi fits. Lawmakers must still decide how protocol governance and front ends fit into federal oversight.
• How inter-agency workflows operate. Even with new statutes, the SEC and CFTC must coordinate examinations, referrals, and data sharing.

Timeline From 2022 to 2025

Strategic Takeaways for Compliance and Policy Teams

1. Build regulatory maps now. Assign each product, token, and service to either SEC or CFTC regimes using RFIA and FIT21 criteria.
2. Implement stablecoin controls. GENIUS Act requirements are not optional. Reserves, segregation, and attestations are baseline obligations.
3. Prepare for dual exams. Until coordination frameworks are finalized, expect parallel SEC and CFTC reviews.
4. Stay aligned with committee calendars. Senate Agriculture and Banking Committee hearings will signal how Congress resolves DeFi and exchange coverage.

What Comes Next

Gillibrand’s campaign for clarity has reached a critical stage. The groundwork has been laid: stablecoin oversight is codified, market-structure bills are advancing, and both regulators are calling for Congress to complete the picture.

The result would be a transparent, statute-based system where compliance can be planned rather than litigated. For the first time, digital asset projects, exchanges, and investors would operate under a predictable federal framework.

It is the shift from regulatory improvisation to statutory governance — one that Senator Gillibrand and her allies have spent years preparing for. The next votes in Congress will decide whether that vision finally becomes law.