SEC Chairman: Most Crypto Assets Are Not Securities

In recent weeks, under Chairman Paul S. Atkins, the U.S. Securities and Exchange Commission announced Project Crypto, an initiative aimed at bringing the crypto asset economy back to America.

First during remarks in Washington, D.C., on July 31, where he debuted Project Crypto and yesterday at a Wyoming Blockchain Symposium in Jackson Hole, Atkins said that “most crypto assets are not securities” and thus, only a small fraction should be classified as securities.

This perspective aims to end the confusion caused by the broad application of the Howey test, which had led many innovators to treat all crypto assets as securities out of an abundance of caution. The chairman has pointed to Senator Bernie Moreno of Ohio, who founded a company that put car titles on the blockchain, as an example of an entrepreneur who needs and deserves clear rules.

In Jackson Hole, the chairman emphasized that context and structure are more important than token classification, signaling a real shift in how the SEC perceives crypto tokens.

The new policy also recognizes that being deemed a security should not be a “scarlet letter.” According to Atkins, the SEC is committed to creating a regulatory environment that allows crypto asset securities to thrive in U.S. markets. This framework will provide issuers with the flexibility of product design that securities laws can offer, including the ability for investors to earn distributions and voting rights. This will help prevent projects from being forced into unnecessary decentralized autonomous organization or offshore foundations.

In addition to the new classification guidelines, Project Crypto will focus on creating a supportive environment for the tokenization of traditional securities like common stock, bonds, and partnership interests. Currently, much of this innovation occurs offshore due to U.S. regulatory challenges.

The SEC has heard from a wide range of companies, from Wall Street firms to Silicon Valley tech unicorns, seeking to tokenize their assets. Chairman Atkins has tasked his staff with working with these firms to provide relief where appropriate, ensuring that Americans are not left behind in this new wave of financial innovation. Specifically, Atkins has proposed that early-stage token issuers be afforded temporary exemptions to encourage innovation while protecting investors.

The SEC’s new agenda under Atkins particularly deviates from the previous “shoot first, ask questions later” approach, remarked Atkins, referring to the stance of his predecessor, Gary Gensler. Atkins has stressed the imperative for regulatory clarity and an environment that fosters innovation.

The new policy direction from SEC Chairman Atkins aligns with broader legislative efforts, like the CLARITY Act, which seeks to formalize definitions and market structures for digital assets.

Further, Atkins has directed its staff to develop guidelines to help market participants classify crypto assets into categories such as digital collectibles, digital commodities or stablecoins, based on the economic realities of a transaction.

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