Atkins Unveils ‘Project Crypto’ to Clarify Token Classifications, Limit Overreach
By Damon Elder
In a significant policy address on Nov. 12, U.S. Securities and Exchange Commission Chairman Paul S. Atkins laid out a roadmap to bring clarity and restraint to the regulation of digital assets through an initiative dubbed “Project Crypto.”
Speaking at the Federal Reserve Bank of Philadelphia, Atkins argued for a token taxonomy grounded in the economic realities of digital asset use, aiming to resolve a decade of regulatory ambiguity that has frustrated developers and investors alike.
“We are going to draw clear lines and explain them in clear terms,” said Atkins, emphasizing the need to align oversight with substance rather than form.
Central to the proposal is a four-part classification framework for crypto assets:
- Digital commodities/network tokens: Assets tied to decentralized, functional crypto systems that do not rely on managerial promises;
- Digital collectibles: Non-securities used primarily for art, gaming, and media without profit expectations;
- Digital tools: Utility tokens serving as credentials, tickets, or membership access; and
- Tokenized securities: Traditional securities represented and traded on blockchain infrastructure.
Only the last category, Atkins stressed, would automatically fall under SEC jurisdiction.
In a departure from recent SEC enforcement patterns, Atkins rejected the notion that all tokens initially issued as part of an investment contract must forever be treated as securities.
“Investment contracts can be performed and they can expire,” he said, citing the 1946 SEC v. W. J. Howey Co. decision that remains foundational to securities law. “A token is no more a security because it was once part of an investment contract than a golf course is a security because it used to be part of a citrus grove investment scheme.”
The remarks endorse a view long championed by Commissioner Hester Peirce: that networks can mature and decentralize to the point where regulatory obligations should fall away.
Looking ahead, Atkins said he has asked SEC staff to develop exemptions tailored to crypto capital formation. These proposals would support token offerings while maintaining investor protections and potentially allow non-security tokens to trade on platforms outside SEC supervision, such as those overseen by the Commodity Futures Trading Commission, or CFTC, or state regulators.
He also reiterated his support for pending Congressional legislation, aligning the agency’s stance with efforts to codify a comprehensive digital asset framework.
“Our goal is not to expand the SEC’s jurisdiction for its own sake, but to allow capital formation to flourish while ensuring that investors remain protected,” Atkins said.
The announcement may mark a turning point for the digital asset industry, which has frequently criticized the SEC’s reliance on regulation by enforcement. Under “Project Crypto,” the Commission appears poised to offer the kind of regulatory clarity long sought by blockchain developers, token issuers, and traditional financial institutions exploring tokenization.
Atkins closed his remarks by affirming that innovation and investor protection are not mutually exclusive – and that the SEC must adapt to support both.
As Project Crypto laid out Atkin’s roadmap to the regulation of digital assets, the topic was subsequently absent from the SEC Division of Examination’s 2026 priorities released Nov. 17.
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