Key Takeaways
- The SEC’s upcoming plan includes introducing a formal “token taxonomy” to clarify how digital assets are classified under U.S. law.
- He noted that tokenized versions of traditional financial instruments “are and will continue to be securities.”
In a major development, U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins said Wednesday that the agency is preparing to modernize its approach to digital asset oversight under a new initiative called “Project Crypto,” laying the groundwork for what could become a landmark shift in crypto regulation.
In prepared remarks delivered at the Federal Reserve Bank of Philadelphia, Atkins said the SEC will “in the coming months” propose a structured token framework anchored in the Supreme Court’s Howey test — the standard that determines whether an asset qualifies as a security.
The SEC’s upcoming plan includes introducing a formal “token taxonomy” to clarify how digital assets are classified under U.S. law. “Fraud is fraud,” Atkins said, emphasizing that enforcement would continue even as the agency works to define clearer regulatory pathways.
Atkins outlined four broad categories for digital assets: “digital commodities” or “network tokens,” “digital collectibles,” “digital tools,” and “tokenized securities.” He noted that tokenized versions of traditional financial instruments “are and will continue to be securities,” but also stressed that investment contracts “can come to an end,” meaning a token isn’t automatically a security indefinitely.
The SEC’s forthcoming “package of exemptions” will aim to give crypto projects flexibility when selling tokens through investment contracts without forcing them into traditional securities regimes. Atkins described this as an effort to “create a tailored offering regime for crypto assets.”
The remarks came during a fintech policy conference in Philadelphia, where the SEC chair also pointed to ongoing congressional efforts to divide regulatory responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC). A new draft proposal from Senate Agriculture leaders this week would grant the CFTC primary authority over non-security digital assets, echoing the House’s earlier CLARITY Act.
“The Commission’s work is designed to complement, not replace, Congress’s efforts,” Atkins said, noting that the SEC’s taxonomy proposal is meant to align with legislative developments. He cited Commissioner Hester Peirce’s observation that a project’s token launch might initially involve an investment contract, but “those promises may not remain forever.”
Further, Atkins also confirmed that the SEC’s enforcement arm will continue to pursue fraudulent activity aggressively. “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,” he said.
His comments arrived just days after Senate Agriculture Committee Chairman John Boozman and Senator Cory Booker released their discussion draft of a crypto market structure bill, directing the SEC and CFTC to “collaborate on necessary inter-agency rulemakings.”
Boozman said the bill aims to ensure that regulators have the “tools, personnel, and resources necessary to oversee digital asset trading,” signaling that Congress is moving closer to formalizing the U.S. crypto market’s legal foundation.
