U.S. Securities and Exchange Commission Chair Paul Atkins has outlined how the agency plans to oversee digital assets under its new “Project Crypto” initiative.
Speaking at the Federal Reserve Bank of Philadelphia, Atkins detailed a roadmap for modernizing the SEC’s approach to crypto enforcement and classification.
Defining Token Taxonomy
Atkins said the agency intends to develop a “token taxonomy” based on the long-standing Howey Test, which determines what constitutes a security under U.S. law.
He emphasized that “investment contracts can come to an end,” signaling that the SEC could recognize when a token evolves beyond its initial security status.
“Commissioner [Hester] Peirce has rightly observed that while a project’s token launch might initially involve an investment contract, those promises may not remain forever,” Atkins said.
“Once the investment contract can be understood to have run its course, the token may continue to trade, but those trades are no longer ‘securities transactions.’”
Clarifying Crypto Categories
Under the framework proposed by Atkins, digital commodities, collectibles, tools, and network tokens would not be considered securities.
However, tokenized securities would remain under the SEC’s jurisdiction.
Atkins suggested this distinction could bring much-needed clarity to the industry and reduce regulatory uncertainty that has plagued crypto companies for years.
He added that the Commission may soon consider exemptions for certain crypto assets, creating a “tailored offering regime” for those that are part of, or related to, investment contracts.
Strong Enforcement Still in Place
Despite outlining a more nuanced approach, Atkins made clear that enforcement will remain robust.
“This is not a promise of lax enforcement at the SEC,” he said.
“Fraud is fraud. While the SEC protects investors from securities fraud, the federal government has a host of other regulatory bodies well equipped to police and protect against illicit conduct.”
Aligning with Congressional Efforts
Atkins’ remarks come as lawmakers continue to debate a market structure bill aimed at clarifying which agencies should oversee various segments of the crypto market.
He expressed hope that the Commission would move in step with Congress, using the legislation to create a unified regulatory environment that encourages innovation while protecting investors.
The comments mark a potential shift in tone from previous years, when the SEC’s enforcement-first approach often drew criticism from the crypto sector.
Now, the emphasis appears to be on creating a clear, flexible framework that adapts to evolving blockchain technologies.
If implemented, Project Crypto could reshape how digital assets are classified, traded, and regulated in the United States.
