As the SEC unveils a strategic plan to modernize securities regulations and drive US leadership in blockchain integration within financial markets, the CFTC launches a corresponding “crypto sprint.”
On July 31, 2025, Securities and Exchange Commission (SEC) Chair Paul Atkins delivered a significant digital asset policy speech at the America First Policy Institute in Washington, D.C. (“American Leadership in the Digital Finance Revolution”). In the speech, Chair Atkins reflected on the history of financial and technological innovations in the US capital markets, repudiated former regulatory approaches that in his view stifled the development of blockchain innovation and digital asset technologies, and announced the SEC’s “Project Crypto.”
Project Crypto is the direct result of President Trump’s January executive order on digital assets (the Order) aiming “to make America the crypto capital of the world” (for more information, see this Latham blog post). Chair Atkins delivered his speech just one day after the President’s Working Group on Digital Asset Markets published a comprehensive report on digital assets (“Strengthening American Leadership in Digital Financial Technology”) (the PWG Report) (for more information, see this Latham blog post).
Since the Order was issued, the SEC has established a Crypto Task Force led by Commissioner Hester Peirce (for more information, see this Latham blog post) and clarified the extent of its regulatory jurisdiction over various digital asset products and services (for more information, see these Latham blog posts on meme coins, mining, custody, staking, and exchange-traded products).
Congress has also taken historic action to establish a framework for digital assets, successfully enacting stablecoin legislation (for more information, see this Latham blog post on the GENIUS Act), and advancing market structure legislation from the House to the Senate (for more information, see the Latham US Crypto Policy Tracker on the CLARITY Act).
SEC’s Project Crypto
Project Crypto is an SEC-wide initiative to modernize the securities laws to foster capital formation in the digital asset markets and “enable America’s financial markets to move on-chain.” Project Crypto will employ formal notice and comment rulemaking and other interpretive or exemptive authorities to overhaul the securities laws that govern certain digital assets and digital asset service providers.
Key Project Crypto Initiatives
- Establish a regulatory framework for distributions of crypto assets in the US. In a break from the SEC’s approach under the previous administration, Chair Atkins definitively stated in the speech that “most crypto assets are not securities” — and should not be governed as such under the securities laws. To address the persistent “confusion over the application of the ‘Howey test’” to digital assets that may have inhibited capital formation in the US and driven crypto development abroad, Chair Atkins has ordered the SEC staff to develop clear guidelines for market participants to determine whether a digital asset is a security or subject to an investment contract. For instances when the securities laws do apply, Chair Atkins has directed the staff “to propose purpose-fit disclosures, exemptions, and safe harbors, including for so-called ‘initial coin offerings,’ ‘airdrops,’ and network rewards.” More generally, Chair Atkins has immediately directed SEC staff to “to draft clear and simple rules of the road for crypto asset distributions, custody, and trading” for public notice and comment.
- Modernize the SEC’s requirements for registered intermediaries. Chair Atkins noted that although the SEC supports users’ right to have self-custody of digital assets and participate in on-chain activities, some investors will continue to rely on intermediaries to hold their assets and trade on their behalf. “The existing custody rules,” observed Chair Atkins, “were created without crypto assets in mind.” Chair Atkins has therefore instructed the staff to explore ways to adapt the current securities laws to better accommodate cryptoasset custody, including potential exemptions or other relief, alongside rule modifications. The speech also referred to the since-withdrawn special-purpose broker-dealer guidance, which prohibited broker-dealers from dealing with digital assets unless they limited their activities solely to digital assets, effectively preventing most large institutions from engaging in digital asset-related activities. Chair Atkins quoted the PWG Report that market participants “should be permitted to engage in multiple business lines under the most efficient licensing structure possible.”
- Develop guidance and proposals to allow market participants to innovate with “super-apps.” Chair Atkins took this concept further in his suggestion for the creation of “super apps,” suggesting that securities intermediaries should be able to offer services for traditional securities, tokenized securities, and non-security digital assets, including services like staking and lending, under a single federal regulatory regime. Pursuant to the recommendations in the PWG Report, Chair Atkins tasked the SEC staff with creating a licensing framework that permits the trading of non-security crypto assets alongside cryptoasset securities on SEC-regulated platforms. Furthermore, he asked the staff to evaluate the SEC’s ability to “permit non-security crypto assets that are subject to an investment contract to trade on trading venues that are not registered with the Commission” (see section below, “CFTC Acting to Keep Apace With the SEC”).
- Update agency rules and regulations to promote decentralized, blockchain-based software systems in the securities markets. According to Chair Atkins, the federal securities laws were devised (and operate) assuming a regulated intermediary is typically involved in every securities transaction. Blockchain-based decentralized finance (DeFi) software systems, however, “facilitate automated, non-intermediated financial market activity.” Chair Atkins directed the SEC staff to consider rulemaking (or rule updating) to facilitate DeFi and “protect[] pure publishers of software code.” His objective is to “to unleash the potential of on-chain software systems in our securities markets” and “promote innovation and competition in our markets.”
- Facilitate tokenization of traditional securities. Chair Atkins also noted that he has asked the SEC staff to consider the issues surrounding tokenization of traditional equity and debt securities. Such tokenization has to date taken place offshore due to the uncertainties regarding intermediaries described above, including whether regulated intermediaries could be involved in the distribution of tokenized securities and whether tokenized securities could trade in DeFi markets. Emphasizing the need to bring innovation onshore, Chair Atkins stated that the staff would consider potential relief for those seeking to issue or distribute tokenized securities, to the extent needed.
- Innovation exemption — a potential “sandbox.” Similar to “sandbox” regimes in non-US jurisdictions, Chair Atkins noted that the SEC is considering an “innovation exemption that would allow registrants and non-registrants to quickly go to market with new business models and services that do not neatly fit within our existing rules and regulations.” Chair Atkins suggested that such businesses would need to comply only with certain principles-based conditions designed to achieve the policy aims of the securities laws, rather than prescriptive regulatory requirements.
CFTC Acting to Keep Apace With the SEC
On August 1, 2025, one day after the speech by SEC Chair Atkins, Commodity Futures Trading Commission (CFTC) Acting Chair Caroline D. Pham announced that the CFTC was launching a “crypto sprint” in response to the directive in the PWG Report that the SEC and CFTC “use their existing authorities to immediately enable the trading of digital assets at the Federal level” (Crypto Sprint). Notably, she affirmed that the CFTC “will work closely with SEC Chairman Paul Atkins and Commissioner Hester Peirce to achieve Project Crypto.” Furthermore, on August 4, 2025, Acting Chair Pham announced that the first initiative in the CFTC’s Crypto Sprint would be to solicit feedback on a plan to allow “for trading spot crypto asset contracts that are listed on a CFTC-registered futures exchange” (known as designated contract markets (DCMs)).
As currently in force, Section 2(c)(2)(D) of the Commodity Exchange Act (CEA) gives the CFTC jurisdiction with respect to certain transactions in commodities offered to retail customers with leverage, margin, or financing. Such transactions are regulated as if they were futures contracts and therefore must be transacted on a DCM. Importantly, the CFTC does not currently exercise supervisory authority over non-security spot crypto asset contracts other than those captured under Section 2(c)(2)(D). Acting Chair Pham invited public comment from stakeholders on how to implement the PWG Report recommendations using the CFTC’s existing authority as she previously proposed in 2022. While not expressly discussed in the statement earlier this month, in 2022 Acting Chair Pham proposed utilization of the CFTC’s exemptive authority to extend retail foreign exchange and DCM regulations to include non-security spot crypto. Acting Chair Pham recently reiterated this proposal in March 2025.
The proposal that supervisory authority and oversight of spot crypto assets be extended to the CFTC (without disturbing SEC jurisdiction over spot crypto securities) broadly aligns with the regime contemplated by the digital asset market structure bill under consideration in the Senate (i.e., the CLARITY Act; for more information, see the Latham US Crypto Policy Tracker).
Public comments on this initiative are due by August 18, 2025, including on “whether there are any implications under the securities laws or regulations with respect to an SEC framework for trading of non-security assets that are part of an investment contract.”
Paving the Way for Crypto Innovation
In seeking ways to update the US securities laws while acknowledging the necessity of consumer protection measures, Chair Atkins’ speech “represents more than a regulatory shift.” Rather, this is a sea change in approach, directing the staff at the SEC to lead in promoting digital asset capital formation and innovation within US borders. In the wake of the Order on digital assets and the ensuing PWG Report, Chair Atkins is quickly leading the SEC to seize the “generational opportunity” presented by digital assets and DeFi. The CFTC seeks to chart a similar path under the Commodity Exchange Act. In a stark change from the last administration, the SEC and CFTC are not only getting out of the way of US dominance in blockchain technology and innovation, they are attempting to pave the way.
