SEC Chair Paul Atkins Unveils Comprehensive Token Taxonomy to Clearly Define and Regulate Emergin...

SEC plans a token taxonomy to define which digital assets qualify as securities under US law.

Project Crypto aims to modernize SEC rules and guide how crypto tokens trade on different platforms.

SEC will keep strict fraud enforcement while aligning its crypto rules with ongoing congressional efforts.

Securities and Exchange Commission Chair Paul Atkins is leading an effort to establish a clear “token taxonomy” for cryptocurrencies. The initiative aims to define which digital assets qualify as securities. The plan marks a structured step in shaping how the agency regulates the growing crypto sector. Atkins shared details of the initiative during the Federal Reserve Bank of Philadelphia’s Fintech Conference.

The proposed framework will rely on the Howey Test, a legal standard from a 1946 Supreme Court ruling. This test determines if an asset is an investment contract and, therefore, a security. Atkins noted that this approach will recognize limits within existing laws while providing consistency for digital asset oversight.

Evolving Nature of Crypto Assets

Atkins also stressed that cryptocurrencies do not necessarily have to be securities, however, could transform over time. Decentralization of blockchain networks can, in most cases, lead to control being lost to the initial issuer. Such tokens might cease to be securities once the investors cease to rely on the management of the issuer. This idea brings out the importance of flexibility in regulation because technologies evolve and markets evolve.

The position of the SEC under Atkins is a change of direction as compared to the past administrations. Under Gary Gensler, the agency adopted a conservative approach and it regularly employed enforcement measures to establish limits. That approach drew criticism for creating uncertainty within the industry. Atkins’ leadership signals a move toward clearer, rules-based regulation rather than enforcement-driven decisions.

Project Crypto and Market Oversight

The SEC has recently launched “Project Crypto,” a program aimed at updating agency rules for digital assets. The initiative includes plans to review how tokens tied to investment contracts can trade on different platforms. These platforms could operate under state regulations or under the Commodity Futures Trading Commission’s supervision.

Atkins also directed SEC staff to explore a framework for “super-apps.” These platforms could allow users to trade and hold multiple types of assets under a single regulatory license. The goal is to simplify compliance while expanding access to regulated digital asset services.

Maintaining Enforcement and Coordination with Lawmakers

The SEC intends to continue high levels of enforcement of fraud and misconduct despite these new initiatives. The updated approach does not indicate relaxed oversight. Instead, it seeks to balance innovation with investor protection.

The Commission is also looking at exemptions to crypto assets that are under investment contracts. In the meantime, Congress is still debating a number of bills that would attempt to regulate the larger crypto market. Atkins has added that the initiatives of the SEC are in line with the current legislative efforts and complements the activities of the lawmakers in the direction of the wholesome regulation.