For years, the SEC has been painted as the cop on the beat when it comes to crypto, more likely to file an enforcement action than to roll out the welcome mat. But SEC Chairman Paul Atkins’ announcement this summer of a new “Project Crypto” initiative is the latest and clearest signal that there’s a new sheriff in town with a pro-reform agenda. Instead of another warning shot, the SEC is launching a Commission-wide initiative to modernize securities laws so America’s financial markets can move from off-chain to on-chain and be positioned as the global leader in crypto markets.
Digital Asset Reboot
In his July 31, 2025 speech at the America First Policy Institute, SEC Chairman Paul Atkins described the initiative as nothing less than a reboot of the SEC’s approach to digital assets. Rather than twisting 80-year-old securities laws to fit blockchain-based innovation, the SEC is looking to rewrite the playbook. Atkins framed it simply: Despite what the SEC has said in the past, most crypto assets are not securities. But confusion over the application of the Howey test has led some innovators to treat all crypto assets as such. On the other hand, when tokens are securities, the rules need to make sense in an on-chain environment. Chairman Atkins stated that these entrepreneurs need and deserve bright-line rules for determining whether the securities laws apply to their businesses.
The speech came a day after the President’s Working Group on Digital Asset Markets released the PWG Report with clear recommendations for the SEC to build a framework to maintain U.S. dominance in crypto asset markets. Chairman Atkins said the report is “the blueprint to make America first in blockchain and crypto technology”.
This is a sharp turn from the days when every token distribution risked being labeled an unregistered offering. With Project Crypto, the SEC is signaling that it wants innovation in digital assets to happen in the U.S., not overseas.
What’s on the Table?
The plan has several moving parts, but the big themes should be easy to grasp:
Clarity on Classifications. For years, one of the biggest headaches in crypto has been figuring out whether a token is a security, a commodity or something else. Project Crypto calls for bright-line rules to end the guessing game. That includes tailored disclosures and possible safe harbors for early-stage tokens.
Custody that Makes Sense. One of Chairman Atkins’ most striking points is that self-custody is a core American value. In other words, the SEC wants to protect the right of investors to hold their own digital assets, while also fixing outdated custody rules so institutions can safely offer crypto services.
Super-Apps Instead of Silos. Right now, crypto activity is fragmented: staking here, trading there, lending somewhere else. A key priority for Chairman Atkins is to allow market participants to innovate with “super-apps”, platforms that can offer multiple services under one roof, with regulators coordinating across agencies like the CFTC to make that possible. Securities intermediaries should be able to offer a broad range of products and services under one roof with a single license.
“Innovation Exemption”. Arguably the most ambitions component of Project Crypto is the “Innovation Exemption”, a fast-track pathway for new crypto projects to launch without being crushed by legacy compliance obligations, so long as they meet core investor protections. Under Chairman Atkins’ vision, innovators would be able to enter the market immediately with new technologies and business models by complying with certain principles-based conditions designed to achieve core policy aims of the federal securities laws. These conditions may include, for example, a commitment to make periodic reports to the SEC, incorporate whitelisting or “verified pool” functionality and restrict tokenized securities that do not adhere to a token standard that incorporates compliance features.tokenized securities that do not adhere to a token standard that incorporates compliance features.
What Happens Next
Chairman Atkins stated in his speech that he has directed the SEC staff to draft clear and simple rules for crypto asset distributions, custody and trading, and submit those rules for public comment. He also stated that as the SEC staff works to finalize these regulations, the SEC and its staff will in the meantime be considering using interpretative, exemptive and other authorities to make sure that archaic rules and regulations do not smother innovation and entrepreneurship in America.
While Chairman Atkins’ speech announcing Project Crypto doesn’t immediately change current rules, it does instruct the SEC staff to focus on critical areas of digital asset regulatory reform. These include safe harbors for token issuance, authorization for custody and trading and the development of on-chain securities markets powered by decentralized finance or DeFi, an emerging financial system built on blockchain and cryptocurrency that aims to remove intermediaries like banks from financial services. A well-structured safe harbor would allow tokens to be created and distributed with clear guidelines, avoiding outdated securities laws.
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