SEC Chairman Unveils Project Crypto with New Token Taxonomy Framework

SEC Chairman Paul S. Atkins announced the next phase of Project crypto at the Philadelphia Fed Fintech Conference, introducing a token taxonomy framework designed to clarify the classification of digital assets under U.S. securities laws. The initiative seeks to balance innovation and investor protection while fostering transparency in the crypto market.

Atkins emphasized that most crypto tokens in circulation are not securities, clarifying that blockchain existence alone doesn't classify them as such under U.S. law. The SEC continues to apply the Howey Test but with greater flexibility to accommodate the unique nature of digital assets. Tokenization, he noted, doesn't alter an asset's fundamental characteristics—equities and debt instruments remain unchanged even in digital form.

The new framework aims to delineate regulatory boundaries, ensuring tokens functioning as investment contracts remain subject to oversight. This MOVE addresses long-standing ambiguities, potentially reshaping market dynamics for exchanges and projects navigating compliance.