The U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins has detailed the next phase of “Project Crypto,” guiding how digital assets will be regulated under federal securities laws.
The effort builds on work led by Commissioner Hester Peirce and the Crypto Task Force, which focuses on transparent and economically fair treatment of cryptocurrencies.
SEC Clarifies Which Tokens Are Not Securities
In a recent address, Atkins talked about the uncertainty surrounding crypto classification over the past decade, explaining that most of it comes from the changing nature of digital assets. According to him, a cryptocurrency being part of an investment contract under the Howey test does not make it permanently a security because such agreements can end. “I believe that most crypto tokens trading today are not themselves securities,” he said.
The new framework is based on a proposed token taxonomy that categorizes cryptocurrencies by function and the purchaser’s expectations. Under this approach, digital commodities, or network tokens, are not classified as securities. Similarly, digital collectibles, such as NFTs, are also excluded from this category because buyers do not anticipate profits from the managerial efforts of others.
Digital tools, which serve practical purposes like memberships, tickets, credentials, or identity verification, are also outside SEC oversight. On the other hand, tokenized securities continue to be regulated as securities.
Atkins further discussed the application of the Howey test, which identifies investment contracts as involving the putting of money in a common enterprise with an expectation of getting profits from the efforts of others. He said that once the issuer fulfills, fails to satisfy, or terminates their managerial promises, the tokens may continue to trade without being considered securities.
The initiative also includes plans for exemptions and a special offering for digital assets tied to investment contracts. The SEC will coordinate with Congress, the Commodity Futures Trading Commission (CFTC), banking regulators, and other stakeholders to create a regulatory environment that supports innovation while maintaining investor protections.
Fraud remains subject to enforcement, and anti-fraud provisions will also apply to tokens no longer classified as securities.
Shift for Digital Assets
Project Crypto, first launched in July 2025, aims to provide clarity, fairness, and integrity for developers, investors, and intermediaries. Headed by Atkins and Peirce, the initiative was started to differentiate between securities and other digital assets.
This week is proving pivotal for those looking for clearer rules around crypto. On November 10, the Senate Agriculture Committee shared a draft plan to regulate digital asset commodities. That same day, the U.S. Treasury and IRS issued guidance allowing staking on crypto ETPs and passing staking rewards on to retail investors.
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