Author: Coach Liu
Recently, a document in Washington, D.C. quietly ended the long-standing territorial dispute between the two major financial regulatory agencies in the United States. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) officially signed a historic Memorandum of Understanding (MOU) [1]. This is not just a handshake between two bureaucratic institutions; it marks the beginning of a new era for cryptocurrency regulation in the United States—an era moving from fragmented governance to coordinated unity.
Many people may not yet understand the weight of this document. Over the past few years, there have been numerous accounts of these two agencies in conflict. The SEC stated that a certain token is a security, while the CFTC claimed it is a commodity, essentially battling for jurisdiction. This has left project teams stuck in the middle, essentially unable to proceed. They did not even know whom to approach, making compliance a distant prospect. This uncertainty in regulation has always hung over the industry like the Sword of Damocles.
And this memorandum has buried that sword.
1. Minimum Effective Dose: A Shift in Regulatory Philosophy
The most critical and intriguing aspect of this memorandum is the phrase “Minimum Effective Dose” regulatory strategy [1] that both parties jointly announced.
This term is borrowed from pharmacology, denoting the smallest amount of medication needed to treat an illness. Here, its meaning has shifted—previously, more regulation was deemed better; now, just enough regulation is sufficient. SEC Chairman Paul S. Atkins remarked, “The regulatory turf wars of the past few decades, repetitive registrations, and differing rule sets have stifled innovation and pushed market participants into other jurisdictions” [1].
This statement has a tone of reflection. The previous approach, which prioritized regulation for the sake of regulation, ultimately drove innovation out of the United States. Now, both sides sat down to draw up a clear blueprint: which items are securities, which are commodities, where the boundaries lie, how to coordinate enforcement, and how to share information. This is equivalent to providing the industry with a clear map, rather than leaving it to navigate a minefield with no guidance.
CFTC Chairman Michael S. Selig went even further, asserting the need to eliminate redundant and cumbersome rules, fill regulatory gaps, and bring benefits to all Americans, ushering in a golden age for American finance [1]. This is beautifully stated. The ultimate goal of regulation is not to stifle but to protect investors while ensuring that innovation and capital remain in the United States.
2. The Tightening Spell and Amulet for Exchanges
On the very morning the memorandum was signed, news circulated that the U.S. Department of Justice (DOJ) is investigating Binance again, focusing on cryptocurrency flows related to Iran [2].
This brings to mind the autumn of 2023 when Binance's former CEO Changpeng Zhao (CZ) reached a settlement with the DOJ, paying a staggering $4.3 billion in fines (refer to Coach Liu's article from March 28, 2023 [“The CFTC Slams Zhao on the Chopping Block”] ), after which CZ resigned and received a pardon by the end of 2024. Everyone thought that incident had concluded, but regulatory agencies obviously have not moved on.
Why did the DOJ act right after the memorandum was signed? Perhaps it is not a coincidence, but rather the beginning of coordinated actions.
Previously, the CFTC, SEC, and DOJ acted independently. Now, the memorandum clearly establishes a cross-agency information-sharing mechanism for coordinated investigations and enforcement actions [1]. This means that all regulatory agencies will have access to the conditions and data of exchanges and can act jointly.
For compliance-conscious exchanges, this is an amulet—by meeting one set of standards, they can satisfy both agencies' requirements. But for those still looking to navigate gray areas and engage in regulatory arbitrage, this is a tightening spell—every move they make will be under the watchful eye of a united enforcement network.
3. The Broad Path and Narrow Bridge for Projects
At the same time the memorandum was signed, Ripple announced significant news: it would repurchase $750 million in stock at a $50 billion valuation [3]. Those familiar with the situation know how long Ripple battled with the SEC, spanning from 2020 to 2023, only recently arriving at a phase result (refer to Coach Liu's article from December 24, 2020 [“SEC Sues Ripple, Satoshi Had Already Predicted”]).
Looking at Ripple, despite the current market being bearish, its valuation has increased by 25% compared to November 2025 financing [3]. This may indicate that the market is assigning a compliance premium.
Previously, project teams focused on ways to bypass regulation. In the future, the perspective must shift—how to embrace regulation. The memorandum clearly defines product categories and simplifies the dual registration process [1]. For new projects, this means they can determine from the outset whether their token needs to be registered with the SEC or reported to the CFTC. No more navigating blindly or hiring a multitude of lawyers to play word games, hoping the regulators won’t bother them.
Will this ultimately become a broad path for project teams or merely a narrow bridge?
4. A Safe Haven and Touchstone for Investors
For regular investors, the impact of this memorandum may be deeper and more subtle.
Regulatory coordination brings increased market transparency. Previously, buying a meme coin involved uncertainty about when it might be classified by the SEC as a security, leading to delisting and price zeroing. In the future, such regulatory surprises may occur much less frequently. A clear product definition means that the nature of the token you purchase and the framework under which it is traded will be relatively certain [1]. This serves as a safe haven for long-term investors.
However, the other side of the coin is that short-term volatility and market fragmentation may worsen. Why? Because regulation has made clear the projects that were bouncing in gray areas: they either need to comply or face termination. Projects that cannot withstand compliance scrutiny will be expedited out of the market. This process is natural selection. Investors need more professional perspectives to discern which projects are genuinely working towards compliance and which are merely leveraging information asymmetries to exploit others.
Investment strategies also need to be adjusted. Previously, one bet on the absence of regulatory enforcement; now, the bet is on which entities survive after enforcement is implemented. The latter requires greater understanding and patience.
5. America's Moment in Global Regulation
Taking a broader view, the recent actions by the United States may not be isolated incidents.
The European Union has fully implemented cryptocurrency market regulations (MiCA), while in the UK, Revolut just obtained its banking license [4]. Singapore's regulatory sandbox has also been in development for many years. Major global economies are exploring regulatory models that suit their own needs.
The "Minimum Effective Dose" strategy proposed by the U.S. differs from the EU's meticulous detail and Singapore's flexible experimentation. It emphasizes adaptability—protecting market integrity while allowing room for innovation. If this approach proves successful, it could become a model for other countries.
More importantly, this memorandum also points to a direction: coordinating global regulatory standards. Although it is still a long way off, at least the first step has been taken [1].
6. Conclusion: From Dark Forest to Sunlit Arena
After the signing of the memorandum, the dark forest of the crypto market may transform into a sunlit arena. The referees have entered the scene, the rules are drawn, and fouls will be called [1]. Though competition will remain fierce, at least people will know where the boundaries lie, how to win, and also how to lose gracefully.
For true builders, this is good news. Because only within a clearly defined arena can good money drive out bad money. For those who merely want to make a quick profit and flee, this is bad news, as the opportunities for exploitation have been minimized.
The "Minimum Effective Dose" regulatory philosophy, at its core, is a return to common sense. Regulation is not about creating trouble, but about resolving problems. Innovation is not about evading rules, but about creating value. When these two find a balance, the industry will have a true future.
Regulation should not be like the mysterious civilization hiding in the dark and shooting at will, as in "The Three-Body Problem." Regulatory authorities should step into the light, taking a stand on a clearly defined field, and become transparent referees.
Confucius once said, not teaching and then executing is called cruelty (punishing for errors without prior instruction is tyranny), which is regarded as one of the four great bad policies. The path toward transparent, standardized, and legalized regulation is still long, but as long as the direction is correct, the distance will not be an issue.
References:
[2] "DOJ reportedly probing Binance again over Iran-related crypto flows", *CryptoSlate*, Mar 12, 2026.
[3] "Ripple to buy back $750M in stock at $50B valuation", *Decrypt*, Mar 12, 2026.
[4] "Revolut secures UK banking license after three-year wait", *Financial Times*, Mar 12, 2026.
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