Crypto markets find themselves stuck in a regulatory grey area, according to Securities and Exchange Commission (SEC) chair, Gary Gensler, Atkins.
The United States Securities and Exchange Commission (SEC) is actively working to bring clarity to the regulatory landscape for cryptocurrencies, with a focus on innovation and maintaining U.S. market leadership. This shift in policy, spearheaded by the appointment of Paul Atkins as Chair, is evident in the launch of Project Crypto on July 31, 2025.
Project Crypto aims to modernize U.S. securities laws to better accommodate blockchain and digital assets. Key elements of this initiative include:
- Clear guidelines for classifying crypto assets: Project Crypto seeks to address persistent confusion around the applicability of the Howey test to digital assets, providing clearer guidelines for classifying crypto assets as securities, stablecoins, digital commodities, or digital collectibles.
- Purpose-fit disclosures, exemptions, and safe harbors: The project aims to support capital formation and innovation without overregulation by introducing purpose-fit disclosures, exemptions, and safe harbors for crypto distribution methods like ICOs, airdrops, and network rewards.
- Modernizing custody and trading rules: Recognizing that traditional custody rules were not designed for cryptocurrencies, Project Crypto aims to adapt SEC requirements for intermediaries and potentially create exemptions or relief to allow broker-dealers and exchanges to operate multifunctionally in crypto markets.
- Facilitating tokenization: The project intends to enable the tokenization of traditional securities—stocks, bonds, partnership interests—on blockchain, and their trading on decentralized finance (DeFi) protocols, including automated market makers without central intermediaries.
- Introduction of an innovation exemption: This proposed exemption would allow new business models or technologies to enter the market on a principles-based, flexible basis without full pre-approval under existing SEC rules.
In his speech at the SEC Speaks conference, Atkins made it clear that most crypto assets are not securities, signalling a departure from the previous administration’s broad enforcement stance and a narrower, clearer regulatory scope to foster innovation. Atkins also emphasized the Commission's willingness to adapt to emerging technologies while remaining consistent with its statutory obligations.
In addition to Project Crypto, the SEC has released updated guidance on meme coins and security tokens this year, and has rolled back multiple investigations and enforcement actions targeting crypto firms. The SEC, under Chair Atkins, is working closely with the Crypto Task Force and using all appropriate supervisory tools—interpretive, exemptive, and regulatory proposals—to ensure regulations do not stifle innovation but enable a competitive and efficient global market.
Chair Atkins declared it a "new day" for the crypto industry under his leadership, signalling a significant shift away from the approach taken by former Chair Gary Gensler. Under Gensler, the Commission prioritized enforcement and tighter regulations aimed at increasing transparency and investor protection. With Project Crypto, the SEC aims to represent a comprehensive modernization and shift toward enabling on-chain financial markets and integrating crypto with traditional capital markets, with the goal of making the U.S. the "crypto capital of the world."
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