Avalanche Proposes Two-Tier Regulatory Framework in Key SEC Task Force Meeting

Ava Labs, the developer behind the Avalanche blockchain, alongside the Blockchain Association and The Digital Chamber, participated in a pivotal meeting with the U.S. Securities and Exchange Commission (SEC) Crypto Task Force on December 9, 2025. The discussions centered on establishing clear regulatory guidelines for crypto assets, with a specific focus on protocol tokens.

The core proposal presented by Ava Labs advocates for a two-tiered regulatory framework. Under this model, the SEC would regulate tokens during their initial sale, treating them as investment contracts. Once a token becomes operational within a live, functional system, oversight would transition to the Commodity Futures Trading Commission (CFTC), which would classify and regulate it as a commodity. This approach aims to create a clear division of responsibility between the two agencies, prevent regulatory overlap, and provide legal certainty without requiring new legislation.

Participants emphasized the critical need for regulatory clarity to foster responsible innovation and protect investors. They argued that consistent disclosure requirements and a framework that evolves with the technology are essential for reducing market confusion and encouraging investment in the sector. The meeting aligns with recent joint statements from the SEC and CFTC highlighting the importance of regulatory clarity for crypto.

Following the meeting, Avalanche's native token, AVAX, experienced a notable price increase of nearly 8%, reaching $14.58, with its 24-hour trading volume surging by 48%. Market analysis indicated AVAX was consolidating within a tight range between $13.70 and $13.90, with firm support identified at lower levels.

In a related development, the article notes the Bitwise BITW Crypto Index ETF, which includes AVAX among its top 10 holdings, has gained traction. With $1.5 billion in assets under management, the ETF is seen as a step toward legitimizing crypto as an asset class and providing broader investor access.