According to Forbes, former CFTC Chair Timothy Massad has published a new paper at the Brookings Institution arguing that merging the SEC and CFTC into a single markets regulator is the best approach to digital asset regulation. Massad asserts that President Trump could be the president who finally gets this long-discussed consolidation across the finish line, despite Massad’s past criticism of Trump’s crypto profiting. The former regulator argues current Congressional “market structure” proposals risk weakening core securities regulation by creating bespoke categories for crypto at industry lobbyists’ behest. Massad’s central concern is that lengthy exemptions and special definitions will be exploited to secure lighter regulation while still selling effectively securities to retail investors.
Why Merge Now?
Here’s the thing – we’ve been talking about merging these agencies for decades. But Massad makes a compelling case that crypto might finally be the catalyst that makes it happen. The current system is fundamentally broken when it comes to digital assets. Products fall between jurisdictional cracks, and Congress is considering legislation that could lock in outdated definitions based on today’s technology. A merged agency could write technology-neutral rules for everything from tokenized securities to spot digital assets, creating consistent requirements for reporting, clearing, and custody across product types. Basically, we’d stop trying to fit square pegs into round holes.
The Taxonomy Problem
Massad pushes back hard on the binary “securities vs commodities” framework that dominates current thinking. Instead, he proposes a continuum where disclosure and regulatory obligations vary based on how assets are actually used. And he’s got a point – even crypto venture firms like Andreessen Horowitz’s a16z have developed multi-bucket token taxonomies that recognize more than two categories. The real insight here? Congress shouldn’t be locking definitions into statute based on what lobbyists are pushing today. A merged agency could refine categories over time as technology and use cases evolve. That’s just smarter regulation.
Illicit Finance Reality Check
Massad doesn’t pull punches on anonymity either. “Anyone who thinks we’re going to rebuild the financial system on the basis of anonymous wallets… is kidding themselves,” he says. He distinguishes between small payments where anonymity might be tolerable and larger transactions where authorities need identification capability. His critique of today’s public blockchain model as “backwards” is particularly sharp – everyone can see transactions tied to addresses, but regulators can’t necessarily identify who owns them. His solution? A digital-identity framework where credentials are verified before smart contracts execute, preserving privacy while ensuring regulatory access when needed. Stablecoin issuers in particular should monitor on-chain activity and file suspicious-activity reports, not just verify direct customers.
Trump’s Unique Position
So could Trump actually pull this off? Massad thinks maybe. Trump has shown he can do things other presidents haven’t, and this might leverage his political capital in a way that previous attempts couldn’t. The timing is interesting too – Congress is already working on digital asset legislation, so if there was ever a moment to bolt a merger provision into broader packages, it’s now. But let’s be real – merging these agencies would mean realigning Congressional committee jurisdictions and overcoming decades of institutional inertia. That’s a heavy lift even for someone who breaks norms as routinely as Trump does. Still, in the complex world of industrial technology and financial regulation, sometimes radical solutions are exactly what’s needed to move forward.
