U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins announced today the launch of what he calls "Project Crypto." This is an initiative by the agency that seeks to "modernize securities rules and regulations to allow U.S. financial markets to operate on blockchain." The announcement came one day after the release of the report by President Donald Trump's Digital Asset Working Group (PWG). It contains recommendations for the SEC and other federal agencies to build a framework to maintain U.S. dominance in the Bitcoin and cryptocurrency markets.

In response to such recommendations, Atkins presented in a speech the SEC Crypto Project, which is governed by five axes:

1. Recover and strengthen the cryptocurrency industry

As the first point of the project, the SEC will work to "bring cryptoasset distributions back to the United States." "The days of complicated offshore corporate structures, decentralization theater, and confusion about the state of security are over," Atkins said. 

"Capital formation is at the heart of the SEC's mission, yet for too long the SEC ignored the demands of the options market and discouraged cryptocurrency-based capital raising. As a result, cryptocurrency markets shifted away from offering cryptoassets and deprived investors of the opportunity to use this technology to contribute to productive economic ventures."

Paul Atkins, Chairman of the U.S. Securities and Exchange Commission.

He emphasized that "most cryptoassets are not securities," and that confusion over the application of the "Howey test" led to them being mistakenly treated as such. Therefore, he directed staff to develop guidelines for classifying cryptoassets into categories such as "digital collectibles," "digital commodities," or "stablecoins."

He also noted that he has asked staff to propose “disclosures, exemptions, and safe harbors” for initial coin offerings, airdrops, and network rewards so that issuers include U.S. citizens and don’t exclude them for fear of lawsuits.

“I'm excited to see new use cases for cryptoasset securities in trading, such as the ability to participate in blockchain network consensus with tokenized stocks,” the SEC chairman said.

He also noted that "many companies are seeking to tokenize their stocks, bonds, and interests" and that he has instructed the Commission to work with them and offer regulatory relief where appropriate.

"American businesses are leveraging blockchain technology to modernize a wide range of legacy systems and instruments. These businesses need, and deserve, clear rules to determine whether securities laws apply to their businesses."

Paul Atkins, chairman of the SEC.

2. Enact freedom, self-custody, and custody enhancements

As a second point of the project, Atkins argued that “the right to self-custody of private property is a fundamental American value,” and that it will therefore be enacted.

However, he noted that some investors will continue to rely on SEC registrants, such as broker-dealers and investment advisers, to hold assets on their behalf, and these firms are subject to additional regulatory requirements when they do so. 

Therefore, it announced that it has ordered its staff to adapt the existing regime to facilitate the custody of cryptoassets, including possible exemptions or other waivers, as well as changes to the rules themselves. This is intended to increase optimizations and competition in the sector.

He questioned the effects of the previous framework (SAB 121) and what he called “Operation Chokepoint 2.0,” which he said “resulted in a shortage of escrow service provider options in today’s market.”

3. Facilitate cryptocurrency service super apps

Third, a key priority of the project is to enable market participants to innovate with "super apps." This means, he clarified, that securities intermediaries must be able to offer a wide range of products and services under one roof with a single license.

He stated that a broker with an alternative trading system should be able to offer “cryptoasset staking, lending, and trading” without the need for “more than fifty state licenses or multiple federal licenses.”

He announced that he has directed his team to develop proposals to realize this vision, including allowing non-securities, but subject to investment contracts, to be traded on platforms not registered with the SEC.

This, he said, would pave the way for CFTC-regulated platforms to offer them with margin capabilities “even without Congress granting additional authority.”

4. Promote decentralization

The fourth point of the Crypto Project is to unleash the potential of on-chain software systems in the country's securities markets, both centralized and decentralized.

He criticized the fact that laws have always assumed "the participation of intermediaries who require regulation." He warned that this should not lead to forcing their presence where they are not needed.

He maintained that decentralized finance will not be "stifled by duplicative or unnecessary regulations." "To realize this vision, we will need to consider some changes to our rules," he clarified, without yet providing details of what those changes would be.

5. Promote innovation in cryptocurrencies

The fifth and final axis of the initiative, in line with the previous ones, is to encourage innovation and entrepreneurship in the cryptocurrency sector, avoiding "bureaucratic procedures and one-size-fits-all rules."

The SEC chairman explained that an "innovation exemption" is being considered to allow companies, whether registered or not, to test business models that don't fully fit the current rules, while still protecting investors.

“This represents more than a regulatory change, it’s a generational opportunity,” Atkins concluded about Project Crypto. “As we move forward on these priorities, I look forward to working with my counterparts across the Administration to make the United States the cryptocurrency capital of the world,” he concluded, in line with Trump’s goal.