In a landmark announcement that could reshape the cryptocurrency regulatory landscape, SEC Commissioner Paul Atkins has stated that the vast majority of digital assets should not be classified as securities. This clarification, delivered at the Federal Reserve Bank of Philadelphia Fintech Conference, addresses years of industry uncertainty and aligns with the SEC's "Project Crypto" initiative to develop a balanced regulatory framework.
Atkins provided clear criteria for when a cryptocurrency qualifies as a security, emphasizing that it must involve an explicit expectation of profits primarily from the managerial efforts of others. He argued that most network tokens and memecoins likely fall outside this definition, reducing their regulatory burden. However, tokens representing investment contracts, termed "tokenized securities," will remain under SEC oversight.
The SEC plans to introduce a "token taxonomy" in the coming months, categorizing digital assets into four groups: digital commodities (programmatic value in decentralized systems), digital collectibles (NFTs with no investment expectations), digital tools (for access or identification), and tokenized securities. Atkins highlighted that tokens are not permanently securities; once an investment contract is fulfilled or terminated, the asset may no longer be subject to securities laws.
This announcement comes as Congress prepares to debate comprehensive cryptocurrency legislation, with Atkins revealing SEC collaboration on a market structure bill aimed at investor protection, market integrity, and innovation promotion. He stressed that the goal is not to expand SEC jurisdiction but to provide clarity, warning that fraud will still be pursued aggressively. The initiative supports President Donald Trump's aim to finalize crypto regulation by year-end and could accelerate institutional adoption.
