Under the direction of Chairman Paul S. Atkins, the Securities and Exchange Commission (SEC) is undergoing a significant transformation, signaled by his assertion that most crypto assets should not be categorized as securities. This statement, delivered on July 31, 2025, at the America First Policy Institute, signals a notable change in how digital assets are regulated and aligns with a broader effort to update the U.S. financial system. This initiative, called “Project Crypto,” aims to cultivate a regulatory space that encourages innovation while safeguarding investors and fostering market competition.
Atkins’ announcement followed the release of a report from the President’s Working Group on Digital Asset Markets. This report presented strategies to solidify America’s leading role in digital financial technology. Referred to as the “blueprint to make America first in blockchain and crypto technology,” the report provides the groundwork for Project Crypto. The initiative shows the SEC’s commitment to simplifying regulations, moving away from the previous administration’s primarily enforcement-based approach, and creating a more transparent and predictable setting for digital asset innovation [1].
A core aspect of Project Crypto is establishing precise guidelines to categorize crypto assets as securities, commodities, stablecoins, or other types of digital assets. The SEC is dedicated to offering clear and straightforward “bright-line rules” and “purpose-fit disclosures, exemptions, and safe harbors” for security tokens, including initial coin offerings (ICOs), airdrops, and network rewards. These steps are intended to stimulate innovation and reduce the regulatory ambiguity that has historically pushed crypto businesses to operate in other countries [1].
Custodial flexibility is another vital element of the initiative. Atkins emphasized that enabling Americans to self-custody their digital assets is a “core American value.” The SEC plans to modernize custody requirements for registered intermediaries and promote a competitive market for custodial service providers. This approach is in line with the PWG Report’s recommendations and seeks to facilitate the development of a strong and diverse custodial infrastructure for crypto assets [1].
Furthermore, Project Crypto intends to support the rise of “super-apps” — platforms offering a diverse set of digital asset services under a single licensing framework. This strategy aims to minimize regulatory fragmentation and create a more integrated market for both securities and non-securities products. The SEC will work together with the Commodity Futures Trading Commission (CFTC) and other regulatory bodies to ensure a consistent and effective regulatory environment [1].
The initiative also highlights the importance of on-chain innovation, especially within decentralized finance (DeFi). The SEC plans to differentiate between software publishers and intermediaries and develop rational, practical rules for on-chain systems. The agency will explore revisions to existing regulations, like Regulation NMS, to accommodate on-chain trading of tokenized securities. In addition, the SEC will consider providing relief to ease the tokenization of traditional assets, such as equities and debt instruments [1].
Market participants should closely monitor the SEC’s proposed rule changes and participate in the public comment process. The agency is expected to present detailed proposals soon and may provide interpretive or exemptive relief in the meantime. This offers stakeholders an opportunity to influence the evolving regulatory landscape and prepare for the anticipated expansion of the digital asset industry. These initiatives are also likely to create new opportunities for capital formation, product development, and market entry, although they will require careful attention to compliance, risk management, and operational readiness [1].
Project Crypto signifies a strategic shift by the SEC towards a more supportive and innovation-friendly regulatory environment. By embracing on-chain markets, supporting DeFi, and providing clear regulatory guidance, the agency aims to position the United States as a global leader in the digital finance revolution. Market participants are encouraged to prepare for a dynamic and competitive market and capitalize on the opportunities presented by this transformative initiative [1].
Source: [1] SEC Chairman Atkins Announces “Project Crypto” (https://www.aoshearman.com/en/insights/ao-shearman-on-fintech-and-digital-assets/sec-chairman-atkins-announces-project-crypto)