Yup I know about the SEC vs CFTC turf war. I've actually had meetings with both of those regulators where they've staked overlapping claims to regulate certain things. As nice as it would be to have a clearer setup, the way financial regulations work in the US is that there are lots of areas of overlap (state vs federal as well as with multiple agencies) and if you're a regulated entity you have to keep all of the regulators satisfied. And even if you're not a regulated entity they can (in certain cases) just decide you are. For example if you make banking software believe it or not at some point the OCC will just decide you're important enough that you have regulatory obligations and they will examine you (I know about that case specifically through personal experience).
I really don't see why you're saying they have a poor claim to regulate here. There is a clear investor protection angle and that's in their remit. Coin issuers can't claim that it's only qualified investors that are affected and the SEC has traditionally protected retail investors. Secondly the SEC could make a case through their remit on orderly markets and capital formation.
All of the financial regulatory bodies are tasked with investor protection...that's not something unique to the SEC. The SEC has jurisdiction over securities and some types of markets. These aren't tradable entities, and if you can't trade it, it's definitely not a security, and there's no market to regulate either. The SEC may have jurisdiction over cryptocurrency markets and some types of cryptocurrencies, but this product is neither of those. It's an interest bearing lending account.
There are far better equipped agencies for regulating these lending accounts than the SEC, with actual jurisdiction that makes sense. FINRA and the FDIC immediately spring to mind...they both regulate interest bearing lending accounts for retail investors. FINRA for retail investment accounts, FDIC for retail banking accounts.
I really don't see why you're saying they have a poor claim to regulate here. There is a clear investor protection angle and that's in their remit. Coin issuers can't claim that it's only qualified investors that are affected and the SEC has traditionally protected retail investors. Secondly the SEC could make a case through their remit on orderly markets and capital formation.