SEC Launches Project Crypto, Declares Most Tokens Are Not Securities

Atkins, who took office in April 2025, has quickly shifted the tone at the SEC. Previously known for its aggressive enforcement under former Chair Gary Gensler, the agency had pursued high-profile cases against Coinbase, Binance, and others. Now, Atkins declares that “most crypto assets are not securities,” arguing that past application of the Howey test has caused unnecessary legal risk and hindered innovation.

He contends that instead of blanket enforcement, the SEC will now emphasize capital formation, technological progress, and investor protection. “Capital formation is at the heart of the SEC’s mission,” Atkins told his audience, highlighting how outdated policies drove crypto firms offshore.

Project Crypto builds on a 160-page White House report released on July 30, 2025 by the President’s Working Group on Digital Asset Markets, which includes senior agency officials such as SEC Chair Atkins and Treasury Secretary Bessent among its members. The report outlined sweeping recommendations for legislation and regulation across digital asset infrastructure, securities, stablecoins, custody, and market structure. The initiative aligns with the GENIUS Act, signed into law recently, which establishes the first federal stablecoin framework enabling licensed banks, nonbanks, and credit unions to issue dollar‑pegged digital currencies under strict reserve and disclosure rules.

Atkins sketched out several core objectives for Project Crypto. First, the SEC aims to provide clear guidance to define whether a token qualifies as a security, commodity, or stablecoin, a distinction that underpins regulatory oversight and legal compliance. Second, the agency plans to reintroduce regulated pathways for initial coin offerings (ICOs) and token airdrops, which were once central to crypto fundraising. This would involve new safe harbor provisions, tailored disclosure frameworks, and specific exemptions to encourage compliant capital formation.

Third, Atkins emphasized the importance of tokenizing traditional financial instruments such as stocks and bonds on blockchain platforms. He noted that firms are already lining up to offer these services in the U.S., reflecting growing demand for on-chain asset infrastructure. Fourth, regulators may revise broker-dealer classifications to support integrated crypto platforms, often referred to as “super-apps”, that offer services like staking, trading, and custody under a single license.

Finally, Atkins stated that the SEC will use its interpretive and exemptive powers to phase out outdated regulations that hinder innovation. Instead, the agency will prioritize a flexible, minimal-interference framework, provided investor protections remain intact. The overall goal, he said, is to modernize oversight without compromising financial integrity.

While Congress has advanced its own crypto legislation, including the stablecoin-focused GENIUS Act and broader regulatory bills such as the CLARITY Act, Atkins stressed the SEC doesn’t need to wait for legislative action to move forward. He directed SEC staff to draft proposed rules for public comment with urgency.

Reactions to Project Crypto have been mixed. While the initiative marks a welcome departure from years of regulatory ambiguity, some policy experts warn that easing restrictions too quickly could expose investors to unforeseen risks. Others question whether the SEC’s new direction can strike the right balance between promoting innovation and maintaining market integrity, especially as global regulatory standards continue to evolve. Political tensions also persist. Detractors point to President Trump’s personal ties to crypto investments and question whether the administration’s pro-crypto agenda might introduce conflicts of interest in regulatory decisions.

In the coming months, SEC staff are expected to issue proposed rulemaking in several areas: draft definitions and classifications for crypto assets under securities law; disclosure and distribution requirements for ICOs and token rewards; custody regulations tailored to crypto-specific risks; and licensing criteria for integrated crypto platforms or “super-apps.” Industry watchers say it could take six months or more before draft rules emerge, once public comment periods and internal reviews are complete. Meanwhile, Congress continues to deliberate on broader market‑structure and tokenization bills. If lawmakers pass further legislation this fall, the SEC may need to align its regulatory proposals accordingly.

With Project Crypto, SEC Chair Paul Atkins is steering the agency toward a more welcoming, innovation-first regulatory approach. Anchored in recent White House policy and new stablecoin legislation, the initiative emphasizes token classification, ICO revival, tokenized securities, and streamlined licensing. But critics warn that without cautious implementation, investor protections may be at risk. The effort marks a major shift in U.S. crypto policy, one that could reshape the digital asset landscape for the foreseeable future.