The U.S. Securities and Exchange Commission (SEC) is launching a large-scale regulatory reform to transition financial markets into an on-chain environment. The new initiative, called Project Crypto, was announced by SEC Chair Paul Atkins. The effort focuses on streamlining the issuance of crypto assets, developing tokenized securities, and modernizing custody rules. Support for the initiative reflects the Trump administration’s strategy to position the U.S. as a global leader in the crypto space.
Old Rules No Longer Work
According to Atkins, the SEC’s outdated regulatory framework fails to reflect the reality of digital assets. He emphasized the need to revise rules that are incompatible with on-chain markets and expressed his intention to eliminate barriers for startups and institutional players seeking to work with tokenized assets in the U.S.
As part of Project Crypto, the SEC will begin drafting new rules for the distribution of crypto assets, including ICOs, airdrops, and network-based rewards. Atkins directed the development of specific exemptions and safe harbor regimes so that issuers can include U.S. investors in their campaigns without the risk of litigation.
More Clarity for the Market
Atkins stated that most crypto assets are not securities, despite years of confusion surrounding the application of the Howey Test. In response, he instructed SEC staff to develop clear criteria for classifying assets into categories such as digital commodities, stablecoins, digital collectibles, and securities.
Crypto projects will be given tools to assess their legal status based on the “economic substance of the transaction” and whether promises were made by the issuer. The SEC also plans to build a regulatory framework for tokenized securities, including governance rights, profit participation, and integration with blockchain networks.
Bringing Tokenization Back to the U.S.
The SEC Chair announced that the agency will open access to the U.S. market for companies wishing to issue tokenized shares, bonds, and partnership interests. These issuers may include fintech startups as well as major firms from Wall Street and Silicon Valley. Atkins noted that many such companies have already approached the SEC to discuss asset tokenization.
Self-Custody and Custodians
The document places special emphasis on crypto asset custody. Atkins affirmed users’ right to self-custody and said that registered custodians, including brokers and investment advisers, will be subject to updated rules tailored to the crypto environment.
The SEC will also consider allowing exemptions and modifications to the current custody regime to expand the range of asset storage service providers.
Superapps and Unified Trading
The project includes plans to enable the creation of “superapps” - platforms that combine crypto trading, digital securities, traditional financial instruments, staking, and lending into a single interface. Atkins stressed that such platforms should be able to operate under a single license rather than dozens of federal and state ones, and should be allowed to trade both security and non-security assets on the same marketplace.
The SEC will direct its staff to develop legal proposals for such solutions, including allowing the trading of non-security crypto assets on unregulated platforms, subject to certain conditions.
Blockchain-Based Infrastructure
Project Crypto envisions launching on-chain solutions that eliminate intermediaries. The SEC intends to grant legal recognition to decentralized applications such as automated market makers and other DeFi tools. At the same time, it will create a system to separate responsibilities between software developers and platform operators.
To support the integration of tokenized securities into the regulated market, the SEC may revise Regulation NMS, which Atkins said has proven ineffective in the context of digital markets over the past two decades.
Fast Track for Startups
Atkins also proposed introducing an “innovation exemption” - a mechanism for launching new business models not covered by existing regulations, provided investor protection principles are upheld. This exemption may include requirements for reporting, participant verification (whitelisting), and technical implementation of compliance measures through token standards such as ERC3643.
A Full Regulatory Overhaul Is on the Agenda
As part of Project Crypto, the SEC will also undertake a full update of its regulatory framework to make the U.S. the primary hub for blockchain-based business launches. In the coming months, the agency is expected to propose rule changes, publish official interpretations, and issue exemptions. The SEC will coordinate with other agencies in line with the recommendations of the President’s Working Group on Financial Markets (PWG Report), which was presented earlier.
Read Also: The White House Unveils First Crypto Regulation Report
This post is for informational purposes only and is not an ad or investment advice. Please do your own research making any decisions.