SEC and CFTC Leaders Agree on the Need for Regulatory Harmonization

At a joint SEC-CFTC roundtable on regulatory harmonization, SEC and CFTC Commissioners agreed on the importance of reducing duplicative oversight. 

SEC Chair Paul Atkins framed the roundtable as a turning point, declaring the end of "regulatory fragmentation" and the beginning of an era of harmonized oversight. He argued that decades of jurisdictional conflict and duplicative rules have driven innovation offshore and imposed unnecessary costs on investors, undermining U.S. competitiveness. He emphasized that harmonization—not merger—must guide the path forward, urging the SEC and CFTC to work "hand in glove" to provide clarity, reduce duplication, and restore America’s global financial leadership.

CFTC Acting Chair Caroline Pham highlighted a renewed spirit of SEC-CFTC collaboration after years of jurisdictional friction. She traced the agencies’ history of cooperation and pointed to current joint efforts in digital assets and market structure modernization, including Project Crypto and the CFTC’s Crypto Sprint. She argued that harmonization of regulatory frameworks can reduce costs, promote responsible innovation, and strengthen the competitiveness of U.S. markets.

SEC Commissioner Caroline Crenshaw urged caution in pursuing regulatory harmonization, arguing that alignment should not be treated as a goal in itself. She emphasized that each agency’s statutory mandate—investor protection and capital formation for the SEC, and market integrity and resilience for the CFTC—must remain the guiding principle for collaboration. She warned that efforts to harmonize without this grounding could create gaps, weaken oversight, or produce unintended consequences for markets and investors.

SEC Commissioner Mark Uyeda described "regulatory disruption" as the challenge posed when innovations like blockchain, AI, and DeFi cut across outdated statutory boundaries between securities and commodities. He referred to the 2012 amendments to CFTC Rule 4.5 ("Exclusions from the definition of "commodity pool operator"") which required certain funds to register as commodity pool operators if they used derivatives beyond a low threshold, as a cautionary tale. He said that the resulting dual registration and duplicative reporting imposed millions in compliance costs on mutual funds without improving oversight. He urged regulators to focus on the functional risks of new products and to use tools like information-sharing and joint examinations to avoid unnecessary duplication.