- SEC Chair Paul Atkins announced “Project Crypto,” an initiative to clarify digital asset regulation and update SEC rules.
- The project will develop a token taxonomy based on the Howey test, recognising that an “investment contract” status for a token can eventually end.
- Atkins indicated that most crypto tokens (commodities, collectibles, tools) are not securities, but the SEC will continue to police fraud and regulate tokenised securities.
SEC Chair Paul Atkins outlined how the regulator plans to police digital assets and update its rules under a new “Project Crypto” effort, according to prepared remarks delivered Wednesday at the Federal Reserve Bank of Philadelphia.
Atkins said the Commission will weigh a formal token taxonomy grounded in the Howey test, with an explicit acknowledgment that an “investment contract” can end.
He cited Commissioner Hester Peirce’s view that a token may be sold as part of an investment contract at launch but later trade outside securities laws once those contractual promises have concluded.
Read more: Bitcoin User Accidentally Pays US$105K Fee to Send Just US$10
Most Cryptocurrencies Aren’t Securities
Atkins indicated he views most crypto tokens as non-securities. He singled out digital commodities, digital collectibles, and digital tools as outside the SEC’s securities remit.
However, tokenised securities would remain under the agency’s jurisdiction because they represent ownership of financial instruments already covered by the securities laws and are maintained on a crypto network, he said.
Atkins added that the SEC’s approach will not decide the fate of projects or markets, but should ensure the US remains a place to build under “firm and fair” rules.
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. That said, if you raise money by promising to build a network, and then take the proceeds and disappear, you will be hearing from us, and we will pursue you to the full extent of the law.
SEC Chair Paul Atkins.Atkins also referenced the digital asset market structure bill moving through the Senate, despite the government shutdown. The House is expected to vote this evening on a funding measure already approved by the Senate that would keep the government funded through the end of January after more than 40 days of closure.
Related: US Treasury Clears Path for Staking Yields on Wall Street Crypto Funds
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