SEC & CFTC Overhaul Prediction Markets and Crypto: $2 Trillion at Stake as Atkins Submits New “Taxonomy”
The uncertain regulatory environment for the U.S. digital economy is quickly changing. Today, March 5, 2026, the SEC has sent a major...
Quick overview
- The SEC has proposed a Token Taxonomy to classify $2 trillion in crypto assets, aiming to resolve disputes with the CFTC.
- The proposed four-level classification includes Digital Commodities, Digital Collectibles, Digital Tools, and Tokenized Securities, each with specific regulatory oversight.
- CFTC Chair Michael Selig is focusing on prediction markets, planning to issue rules for Event Contracts while reversing a previous ban on political and sports contracts.
- Executive Order 14215 mandates that major regulatory actions from agencies like the SEC and CFTC undergo White House review, aligning with the administration's innovation agenda.
The uncertain regulatory environment for the U.S. digital economy is quickly changing. Today, March 5, 2026, the SEC has sent a major Interpretive Guidance Proposal to the White House.
Led by SEC Chair Paul Atkins, this proposal introduces a formal Token Taxonomy to organize $2 trillion in crypto assets and settle the ongoing dispute between the SEC and CFTC. At the same time, the CFTC is working to take charge of the fast-growing Prediction Markets sector, which could lead to conflicts with state gaming regulators and anti-gambling groups.
The Atkins Taxonomy: Redrawing the SEC vs. CFTC Map
Instead of relying on enforcement actions, regulators are introducing a four-level classification system to help crypto companies comply more easily.
The Four Proposed Categories:
- Digital Commodities (Network Tokens): Functional, decentralized tokens linked to programmatic operations. These would fall primarily under CFTC jurisdiction.
- Digital Collectibles (NFTs): Assets designed for collection, generally excluded from securities laws.
- Digital Tools: Utility tokens with specific on-chain functions, also escaping the “security” label.
- Tokenized Securities: Tokens representing a claim on profits or traditional financial instruments. These remain under SEC
- Enforceability: Unlike staff-level letters, this “Commission-Level Interpretation” carries significant legal weight and, notably, did not require a formal commission vote under the new 2025 executive branch protocols.
📑 Tokenized assets sit in two regulatory worlds at once: cryptoasset-specific requirements like transaction monitoring and sanctions screening, and existing securities and banking regulations that don't disappear when an asset moves on chain.
Our latest article breaks down the… pic.twitter.com/v4LLLJlpf0
— Elliptic (@elliptic) March 5, 2026
Prediction Markets: The Next $4 Billion Area of Competition
While the SEC focuses on tokens, CFTC Chair Michael Selig has announced a new area for commodity derivatives called Event Contracts.
https://www.reginfo.gov/public/do/eoDetails?rrid=1217012
- The ANPRM Move: The CFTC plans to issue an Advance Notice of Proposed Rulemaking (ANPRM) to create lasting rules for prediction markets such as Polymarket and Kalshi.
- The Reversal: Selig has officially canceled the 2024 proposed ban on political and sports contracts, saying that prediction markets are important ‘truth engines’ instead of just gambling platforms.
- The Resistance: The new ‘Gambling is Not Investing’ group, led by former Trump chief of staff Mick Mulvaney, is lobbying to stop the CFTC. They claim that calling sports bets ‘event contracts’ hurts tribal gaming laws and state tax income.
The White House Directive: Centralized Control (EO 14215)
These rapid changes are happening because of Executive Order 14215 (Ensuring Accountability for All Agencies), which was signed on February 18, 2025.
- Presidential Oversight: Agencies such as the SEC and CFTC must now send all major regulatory actions to the Office of Information and Regulatory Affairs (OIRA) for review before they are published.
- Alignment: This centralization makes sure that guidance from Atkins and Selig matches the White House’s ‘American Innovation’ agenda.
The Analyst’s View: A $2 Trillion Step Toward Normalization
As an analyst, I view this as an ‘Institutional Green Light.’ Defining the taxonomy for $2 trillion in assets takes away the legal risk that has held back U.S. crypto firms for years. For prediction markets, CFTC support offers federal protection from state cease-and-desist orders.
The Strategy: Keep an eye on the OIRA review. When this guidance appears in the Federal Register, expect a strong relief rally in assets now in the gray zone, like Solana (SOL) and several Layer-2 utility tokens.
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