SEC unveils ‘Project Crypto’ to move US markets on-chain and rewrite token rules

The Securities and Exchange Commission (SEC) will launch a commission-wide initiative called “Project Crypto” to modernize securities rules for blockchain-based activity and help shift US markets “on-chain.” 

Chair Paul Atkins said in a July 31 speech at the America First Policy Institute that the initiative will execute recommendations made in the President’s Working Group (PWG) report released this week and build on the new GENIUS Act’s federal framework for payment stablecoins.

He emphasized that the remarks reflected his personal views and not necessarily those of the agency or other Commissioners.

Clear token definitions

Atkins said staff across policy divisions will coordinate with a Crypto Task Force led by Commissioner Hester Peirce to draft proposals “swiftly,” using interim tools, such as interpretive guidance, exemptions, and other relief. 

He added that providing clarity on token status will be a core objective and the initiative will aim to establish guidance to classify crypto assets and determine when a distribution constitutes an “investment contract.” 

Atkins stated that “most crypto assets are not securities” and directed staff to craft purpose-fit disclosures, exemptions, and safe harbors for initial coin offerings, airdrops, and network rewards. 

The aim is to onshore token distributions that migrated offshore amid legal uncertainty.

Guidelines for tokenization 

With firms seeking to tokenize stocks, bonds, and other instruments, Atkins instructed staff to work with issuers of tokenized securities in the US and provide appropriate relief so American investors are not sidelined.

Furthermore, he called self-custody “a core American value.” The SEC Chair added that the agency will update custody requirements for broker-dealers and investment advisers to accommodate crypto, revisiting constraints tied to prior policies such as SAB 121 and special-purpose broker-dealer constructs.

Project Crypto also envisions SEC-regulated venues offering, under one license, trading in non-security crypto alongside crypto asset securities and traditional securities, plus services like staking and lending, reducing duplicative state and federal licensing. 

SEC staff will also develop a framework for side-by-side trading of non-securities and securities and consider allowing certain non-security digital assets subject to investment-contract arrangements to trade on non-SEC-registered venues, opening paths for CFTC-regulated platforms to list with margin.

DeFi and market plumbing

Atkins guaranteed that the initiative will protect “pure publishers” of code, draw lines between intermediated and disintermediated activity, and write workable rules for operators of on-chain systems.

Accommodating tokenized security trading may require updates to the Regulation National Market System to better align with competition.

Additionally, the SEC is considering a principles-based “innovation exemption” to pilot new models without immediate compliance with incompatible legacy rules.

Atkins mentioned conditions such as periodic reporting, allowlisting/verified-pool controls, and compliance-enabled token standards, such as ERC-3643. He framed the agenda as reshoring crypto businesses, normalizing on-chain finance in US markets, and prioritizing commercial viability while maintaining investor protection.

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