A new bill introduced to Congress aims to bridge the regulatory divide between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) concerning cryptocurrency. On Sept. 10, Republican Congressman John Rose, a member of the House Financial Services Committee, proposed the BRIDGE Digital Assets Act, which seeks to establish a Joint Asset Advisory Committee on digital assets. The committee would comprise 20 representatives of the private web3 sector, including digital asset issuers, academics researching digital assets, individuals registered with the Commissions engaged in digital asset-related activities, and digital asset users. Committee members would be tasked with advising the commissions on crypto regulation, identifying opportunities for distributed ledger technologies to improve operational efficiency in financial markets, and “further the regulatory harmonization of digital asset policy between the commissions.” Speaking to Eleanor Terrett of Fox Business, Rose criticized the regulatory status quo regarding digital assets, which has recently been defined by the SEC’s controversial campaign of regulation by enforcement. “The current heavy-handed, regulation-by-enforcement approach isn't working and is instead encouraging investment in this key innovation overseas,” Congressman Rose said. “The joint advisory committee on digital assets will provide a framework for the government and private sector partners to cooperate on a path toward success for the regulatory landscape of digital assets and private sector participants." Should the bill pass, the committee must be established within 90 days of its enactment. The advisory committee would meet twice annually, with the first meeting to be held within 180 days of the bill passing. The committee would deliver findings and recommendations to both agencies, which must then issue public statements detailing their responses. Regulatory harmonization The committee is intended to facilitate collaboration between the two agencies, which have struggled with disagreement over their respective jurisdiction and regulatory apparatus regarding crypto. The CFTC has consistently asserted that many digital assets should be classified as commodities and fall under its jurisdiction, while the SEC has argued that the vast majority of digital assets qualify as securities. This regulatory divide has created uncertainty for projects and investors, and resulted in clashes between the two regulators. Rose’s bill aims to address these issues by ensuring that the SEC and CFTC must work together to establish regulatory guidelines for the web3 sector. SEC and CFTC clashes The SEC and CFTC have been at odds over how to regulate the digital asset sector in recent years, with both agencies sparring over jurisdiction. In June 2018, William Hinman, head of the SEC’s Division of Corporate Finance, declared that both Bitcoin and Ethereum were sufficiently decentralized not to comprise considered securities. In February 2020, CFTC Chairman Heath Tarbert echoed the same sentiment, stating that both Bitcoin and Ether should be treated as commodities under the Commodity Exchange Act. However, tensions ignited after Gary Gensler took the helm of the SEC in 2021, with Gensler asserting that the majority of crypto assets are securities. Notably, the SEC filed lawsuits against major centralized exchanges Coinbase and Binance in 2023, arguing that many crypto tokens and services constitute unregistered securities offerings. Ethereum emerged as an issue of contention for the two regulators in 2023, with the CFTC regulating digital asset futures products as commodity assets while the SEC launched a secret investigation into whether ETH is a security in March of that year. In March 2024, Behnam warned the SEC’s apparent position that Ether is a security threatened to place CFTC-regulated exchanges that list Ether as futures contracts in "non-compliance of SEC rules” despite them simultaneously adhering to CFTC guidelines. In July, Behnam said at least 70% of digital assets are commodities and should be regulated by the CFTC. U.S. courts have recently pushed back against the SEC as well, with Judge Analisa Torres ruling that digital assets do not inherently comprise security investment contracts — even when distributing through primary sales that are securities offerings — while presiding over the SEC’s lawsuit against Ripple. The verdict has since been cited as precedent in subsequent court rulings.