The Chairman of the U.S. Securities and Exchange Commission (SEC), Paul S. Atkins, recently made clear that legislation from Congress is essential to provide durable and predictable rules for the cryptocurrency market. While the SEC has taken steps on its own, including issuing guidance and launching initiatives such as Project Crypto, Atkins and others in Washington argue that true regulatory clarity will only come from laws passed by lawmakers.
Atkins’ comments reflect growing concern across the financial industry that relying solely on regulatory agency actions and enforcement orders cannot produce a stable environment for innovation, investment, and everyday market participation. Instead, many in government, industry, and advocacy groups believe that legislative action will bring certainty to markets that have struggled with ambiguity over whether and how laws apply to digital assets like Bitcoin, Ethereum, and stablecoins.
This article breaks down what the SEC Chair has said, why legislation is viewed as the best way to cement crypto policy, the challenges of the current framework, and what changes could mean for the industry and investors.
Why the SEC Chair Is Calling for Legislation
For years, the SEC has regulated financial markets under laws enacted in the 1930s and 1940s. These laws were not written with cryptocurrencies in mind. While the SEC has tried to apply existing securities laws where possible, the uncertainty around how digital assets should be classified and overseen continues to frustrate businesses, innovators, and investors.
At a recent Senate hearing, SEC Chair Paul Atkins emphasized that while his agency has provided more clarity in the past year than in the previous decade, nothing the SEC can do can “future-proof” the regulatory environment better than clear laws passed by Congress.
Current Regulatory Gaps
Right now, digital assets often fall into gray areas that make it hard to know what rules apply. For example:
How should different types of tokens be classified?
Which agency has authority over various digital asset activities?
How should investor protection and disclosure standards be enforced in decentralized markets?
These questions have led to disputes between regulators, legal challenges, and a cautious approach from many companies that want to participate in the crypto ecosystem but fear legal risk.
Because so many aspects of crypto don’t neatly fit into older laws, government officials increasingly believe that new legislation designed specifically for modern digital markets is the best way to give both investors and companies a clear roadmap.
The Importance of Clarity for Investors and Firms
Uncertainty makes it harder for companies to build products and for investors to commit capital. When rules are unclear, some firms delay launches or avoid certain markets altogether. Investors may also hesitate to participate if they are unsure how enforcement or legal requirements will evolve.
Atkins has said that if Congress passes meaningful legislation, the SEC is prepared to implement it. That would give the agency a defined framework rather than rely on interpretive guidance or enforcement actions to set precedent.
The CLARITY Act and Other Legislative Efforts
Several legislative proposals in Congress aim to establish rules for digital assets. One of the leading ideas gaining attention is the CLARITY Act, which would define regulatory boundaries, protect investors, and give firms clear standards for compliance. This bill and others moving through congressional committees have bipartisan support and are designed to tackle longstanding ambiguities.
Industry groups and regulators alike have pointed to these bills as potential foundations for long-term crypto policy. SEC leadership has publicly supported efforts like the CLARITY Act, asserting that they would bring the kind of legal certainty that regulators alone cannot create.
What Legal Certainty Would Change
If Congress passes comprehensive crypto legislation, several major shifts could occur:
1. Clear Asset Classification
Legislation could define what qualifies as a security, a commodity, or another asset type, helping firms understand which rules apply.
2. Defined Regulatory Authority
A common complaint is the overlapping jurisdiction between the SEC and the Commodity Futures Trading Commission (CFTC). Laws could establish clearer lines of authority.
3. Investor Protections
New laws could enshrine protections specific to digital markets, such as standards for custody, disclosures, and transparency.
4. Fewer Legal Battles
With statutory backing, regulators would have stronger footing for rules that withstand judicial review, reducing legal uncertainty.
5. Encouraging Innovation
Clear rules can attract investment and development, giving innovators confidence to build without fear of sudden enforcement actions.
Why Rules Alone Aren’t Enough
Regulators, including the SEC, do have powers under existing statutes to influence markets. They can issue guidance, bring enforcement actions, and develop interpretive rules. Nonetheless, those authorities are limited by the text of the laws they enforce.
Atkins noted that the SEC has mobilized efforts like Project Crypto and provided technical guidance as Congress considers legislation, but still believes that long-term certainty — “future-proofing” — comes from laws that explicitly define how emerging market structures should work.
Industry Reaction to the Call for Legislation
Many in the crypto community have welcomed the push for clear laws. Over the years, industry leaders have argued that ambiguous or outdated regulatory frameworks have hindered growth and led to costly legal disputes.
Executives from digital asset firms, financial institutions interested in tokenization, and investor groups have all said they would prefer a statutory framework over reliance on enforcement or guidance alone.
The idea is that clear laws help everyone — not just innovators, but also everyday investors who want to understand their rights and protections.
The Role of Bipartisan Support
One notable trend is that efforts to pass crypto legislation have enjoyed bipartisan backing in Congress. Lawmakers from both sides of the aisle have expressed concern that unclear regulation could put the U.S. at a disadvantage globally.
Some senators and representatives have stressed that the U.S. should lead in creating a predictable, competitive regulatory environment for digital assets — both to protect investors and to maintain global influence in financial markets.
This sense of urgency is reflected in congressional committees moving draft legislation forward and coordinating with regulators.
Coordination Between SEC and CFTC
Another important aspect of the push for legislation is the effort to harmonize how different regulatory agencies handle digital assets.
SEC and CFTC leadership recently held a joint event designed to align approaches to crypto oversight and to emphasize cooperation between the two agencies. That cooperation could be further strengthened through legislation, reducing friction and ambiguity in enforcement and compliance expectations.
Legislative frameworks could define clear roles, reducing duplicative or conflicting requirements for market participants.
Balancing Innovation and Protection
There is ongoing debate about finding the right balance between encouraging innovation and protecting consumers and investors.
Clear laws can help strike that balance. They can set standards that allow new technologies to flourish while ensuring that fraud, manipulation, and other harms are addressed.
A regulatory environment that is predictable and consistent can reduce risk without stifling creativity.
Potential Timeline and Challenges
While there is movement toward legislation, the process takes time. Bills must pass both houses of Congress and be signed into law. Achieving consensus on specific provisions can be challenging given differing views on how prescriptive or flexible rules should be.
Still, the growing consensus that clarity is necessary — coupled with bipartisan efforts — suggests that meaningful legislation could advance through 2026.
Implications for the Future of Crypto Markets
If Congress responds to the SEC Chair’s call and enacts comprehensive laws, the crypto landscape could change significantly:
Greater institutional participation as legal clarity reduces risk.
Fewer enforcement surprises, because laws would provide explicit boundaries.
More robust consumer protections, through requirements for transparency and disclosure.
International competitiveness, as U.S. markets could serve as models for regulatory clarity.
A clear legal framework could offer the confidence investors and businesses need to commit to long-term ventures in digital assets.
Conclusion
The message from the SEC Chair is clear: legislation is needed to cement crypto policy. While regulators can provide guidance, enforcement, and partial rules, only laws passed by Congress will provide the durable certainty the market has lacked for years.
This call for action reflects broader efforts within Washington to define how digital assets should operate within financial markets, protect investors, and support innovation. With bipartisan support emerging for key bills and increasing cooperation between regulatory agencies, the stage is set for a major shift in how crypto markets are governed.
For businesses and investors, the push for legislation offers hope that the unpredictable regulatory environment will be replaced with clear standards that support growth, reduce legal risk, and encourage broader participation.
Staying informed about these developments will be essential for anyone involved in cryptocurrencies or digital finance as the landscape continues to evolve.
