SEC Crypto Shake-Up: How Paul Atkins’ Rule Changes Could Redefine Token Markets

Wall Street's revolving door spins again as ex-SEC commissioner Paul Atkins rewrites the rulebook for crypto tokens. The regulatory pivot could unleash a wave of institutional capital—or just create new loopholes for the usual suspects.

Key changes target how tokens are classified, traded, and custodyed. Expect heated debates over what constitutes a security versus a commodity—with billions in market cap hanging in the balance.

Market makers are already positioning for the liquidity surge, while compliance officers brace for another round of 'creative interpretation' from crypto-native firms. One thing's certain: when regulators move, opportunists follow faster than a degenerate chasing a 100x leverage trade.

TLDR

• Paul Atkins, SEC Chairman, defines when a crypto asset qualifies as a security based on third-party managerial efforts.
• Under Atkins’ new framework, most popular crypto tokens like Ethereum and Solana will not be considered securities.
• Atkins exempts certain tokens, such as network tokens, meme coins, and digital tools, from SEC regulation.
• Crypto firms will now receive warnings before facing enforcement actions, with up to six months to address concerns.
• Tokenized securities will still fall under SEC regulation according to Paul Atkins’ updated policy.

The U.S. Securities and Exchange Commission (SEC) Chairman, Paul Atkins, has provided clarity on the regulatory approach toward crypto assets. Under his leadership, Atkins has shifted the SEC’s stance on cryptocurrency tokens, particularly regarding whether they should be classified as securities. His comments mark a significant departure from the previous approach under Gary Gensler. Atkins has emphasized that only tokens with specific managerial efforts linked to their value will fall under SEC jurisdiction.

Paul Atkins Sets Clear Standards for Crypto Regulation

Paul Atkins has defined a clear framework for determining when a crypto asset is considered a security. According to Atkins, a crypto asset qualifies as a security if its value depends on the efforts of a third party. These efforts must be essential and tied to the future value of the asset.

Atkins stated, “A token should only be considered a security when purchasers expect profits from the essential managerial efforts of others.”

"In short, a token is no more a security because it was once part of an investment contract transaction than a golf course because it used to be part of a citrus grove investment scheme." — @SECGov Chair Paul Atkins. https://t.co/qqleUVTnRD

— Eleanor Terrett (@EleanorTerrett) November 12, 2025

Under this new policy, the majority of crypto assets will not be categorized as securities. This includes many popular tokens such as ethereum and Solana, which do not meet the criteria set by Atkins. The new rules mark a stark contrast to the previous administration, which deemed many crypto tokens as securities, causing legal challenges and regulatory uncertainty for firms.

In his remarks, Paul Atkins highlighted certain types of crypto tokens that WOULD not be classified as securities. Atkins pointed to “network tokens,” which are associated with decentralized blockchain networks, as exempt from SEC oversight. He also included “digital collectibles” and meme coins, which are popular and volatile in nature.

Atkins explained that “digital tools,” such as crypto assets that offer practical functions like tickets or memberships, would also fall outside SEC regulation. These categories, Atkins argued, do not rely on third-party efforts for value and thus should not be considered securities. This clarification provides clearer guidance to firms and investors on which types of tokens are subject to regulatory scrutiny.

Warnings Before Enforcement Under Atkins’ SEC

Paul Atkins also outlined a more measured approach to enforcement actions under the SEC. He explained that crypto firms would now receive warnings before any enforcement actions are taken. Atkins proposed a grace period of up to six months for companies to address regulatory concerns before facing any penalties.

The shift in approach seeks to give crypto companies more time to comply with regulatory standards. This marks a departure from the aggressive enforcement tactics seen under Gary Gensler’s leadership, which led to costly legal battles for the industry. Atkins’ approach aims to foster cooperation and minimize legal risks for crypto firms.

Atkins has expressed his commitment to ensuring that tokenized securities, or copies of traditional securities trading on the blockchain, remain under SEC regulation. He reiterated the importance of protecting investors while supporting innovation in the crypto space.