SEC Chair Paul Atkins announced “Project Crypto,” a bold initiative to modernize U.S. securities regulations and integrate blockchain technology into capital markets. The initiative aims to position the U.S. as the global leader in blockchain finance by enabling on-chain trading, custody, and fundraising while aligning with President Trump’s vision to make America the “crypto capital of the world.”
Replace outdated, analog-era rules with clear, blockchain-native policies. This involves drafting new securities rules for tokenized assets like stocks and bonds, and providing exemptions and safe harbors for crypto fundraising methods such as ICOs and airdrops.
Move away from the vague Howey Test to establish “bright-line rules” distinguishing digital collectibles (NFTs), stablecoins, and investment contracts, with most crypto assets not classified as securities. Update regulations to support self-custody wallets and institutional providers, facilitating blockchain-based settlement and smart contract use.
Introduce “innovation exemptions” to allow startups to launch products with principles-based compliance, reducing legal uncertainty and encouraging crypto firms to operate in the U.S. rather than offshore. Authorize platforms combining securities and non-securities trading, staking, and lending under a single regulatory framework, fostering competition and growth in the digital asset ecosystem.
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The initiative builds on the GENIUS Act for stablecoin oversight and recommendations from the President’s Working Group on Digital Asset Markets. Led by Commissioner Hester Peirce’s Crypto Task Force, Project Crypto aims to shift the SEC from regulation-by-enforcement to a clear, supportive framework, addressing past criticisms of stifling innovation.
Atkins emphasized that the SEC will not let U.S. markets stagnate while global innovation advances, with plans to modernize rules like Reg NMS and support tokenized securities to keep pace with global trends. This move has sparked interest from firms like BlackRock, Coinbase, and JPMorgan, who are already exploring tokenized assets and on-chain infrastructure.
Tokenizing securities (stocks, bonds, etc.) on blockchain could streamline trading, settlement, and custody, reducing costs and delays. Blockchain’s near-instant settlement (T+0) could replace the current T+2 system, boosting liquidity and reducing counterparty risk. Clear rules for tokenized assets and DeFi platforms could democratize access to investments, enabling retail investors to participate in markets previously dominated by institutions.
By legitimizing on-chain trading and fundraising (ICOs, airdrops), Project Crypto could attract billions in capital to U.S.-based crypto markets, reversing the trend of firms moving offshore to jurisdictions like Singapore or Dubai. Authorizing “super apps” that combine trading, staking, and lending could foster new financial products, spurring competition among platforms like Coinbase, Kraken, and traditional firms like JPMorgan entering the tokenized asset space.
Replacing the Howey Test with clear token classification rules (e.g., distinguishing NFTs, stablecoins, and securities) reduces legal ambiguity, potentially lowering compliance costs and litigation risks for crypto firms. Moving away from regulation-by-enforcement to principles-based compliance via “innovation exemptions” could encourage startups to operate in the U.S., fostering a more predictable regulatory environment.
Modernized custody rules for self-custody wallets and institutional providers could set a global standard, balancing decentralization with investor protection, but may face scrutiny over security and fraud risks. As the U.S. aims to be the “crypto capital,” Project Crypto could shape international standards, pressuring jurisdictions like the EU or Asia to align with U.S. blockchain regulations or risk losing market share.
While the initiative promises to foster innovation, the ambitious scope raises questions about implementation timelines, potential regulatory gaps, and whether the SEC can balance investor protection with decentralization. The success of Project Crypto will depend on the clarity and practicality of the new rules, as well as cooperation with industry stakeholders.