SEC Chair Atkins Makes Historic Cryptocurrency Announcement: It’s Fundamentally Transforming
US SEC Chairman Paul Atkins announced plans to introduce a 'token taxonomy' to clarify the legal status of cryptocurrencies as part of the SEC's 'Project Crypto' initiative. Speaking at a Fintech Conference, Atkins emphasized creating a balanced regulatory framework to promote innovation while protecting investors. The taxonomy will categorize crypto assets into four types: digital commodities, digital collectibles, digital tools, and tokenized securities. Atkins stressed that not all tokens are securities permanently, as investment contracts can end. He highlighted collaboration with Congress for crypto legislation and emphasized clear rules for innovation in America. The framework aims to provide clarity without tolerating fraud, positioning the U.S. as a leader in financial innovation.
SEC to Introduce 'Token Taxonomy'
US Securities and Exchange Commission (SEC) Chairman Paul Atkins announced plans to prepare a “token taxonomy” in the coming months that will clarify the legal status of cryptocurrencies. This initiative is a key part of the SEC’s “Project Crypto” digital asset strategy, aiming to bring clarity to the crypto market.
Clear Distinctions for Digital Assets
Speaking at the Federal Reserve Bank of Philadelphia Fintech Conference, Atkins emphasized the importance of drawing clear distinctions between different types of digital assets. He stated, “We will draw clear lines and explain them in clear terms.” According to Atkins:
- Digital commodities: Assets with programmatic value linked to functional, decentralized systems.
- Digital collectibles: NFTs representing rights to art, music, or similar items, without investment expectations.
- Digital tools: Tokens used for membership, tickets, or identification purposes.
- Tokenized securities: Assets representing ownership of financial instruments, subject to SEC jurisdiction.
Clarifying the Status of Tokens
Atkins clarified that digital commodities, collectibles, and tools will not be considered securities, while “tokenized securities” representing investment contracts will remain under SEC regulation. He further explained that the relationship between tokens and securities is not permanent: “Once an investment contract is fulfilled or terminated, the token itself is no longer a security.”
Alignment with Congressional Crypto Legislation
Atkins stated that the SEC’s approach aligns with Congress’s efforts to create comprehensive crypto legislation. He noted that President Donald Trump’s administration aims to complete crypto market regulation by the end of the year. He also supported Mike Selig’s confirmation as CFTC chairman, further fostering collaboration for market oversight.
Regulatory Goals and Safeguards
Atkins highlighted that the SEC’s priority is to protect investors while supporting capital formation. He warned against fraudulent activities, stating: “If you raise funds from investors and disappear, the SEC will find you.” Entrepreneurs were encouraged to innovate under clear rules, with Atkins urging regulators to act “fairly, consistently, and proportionately.”
A Vision for America’s Financial Innovation
Atkins concluded with an optimistic message: “Regulators alone won't determine the fate of the crypto market. The market will. But clear and reasonable rules can make America a pioneer of financial innovation.” He emphasized that fear of innovation should not hold the nation back from progress.