The U.S. Securities and Exchange Commission (SEC) is advancing a major regulatory overhaul for digital assets through an initiative called "Project Crypto." Announced on February 13, 2026, and led by Division of Corporation Finance Director James Moloney, the framework aims to replace the agency's historically enforcement-heavy posture with structured, rule-based guidance.
The core of Project Crypto is a four-part digital asset taxonomy designed to clarify jurisdictional boundaries. The proposed classification system divides assets into: Digital Commodities (assets without profit expectation from managerial efforts, typically under CFTC oversight); Digital Collectibles (unique tokens like certain NFTs not structured as investment contracts); Digital Tools (utility-focused tokens within decentralized networks); and Tokenized Securities (traditional financial instruments on blockchain, remaining under SEC supervision).
A key innovation is the proposed "decentralization exit mechanism." This new regulation would allow certain tokens to transition out of securities status once their networks become sufficiently decentralized and issuer-driven managerial efforts cease. For tokens that remain classified as securities, the SEC plans to propose simplified compliance structures for issuance and secondary trading.
The initiative, launched in 2025 under SEC Chairman Paul Atkins, represents a coordinated effort with the Commodity Futures Trading Commission (CFTC) to harmonize oversight of the approximately $2 trillion tokenized asset sector. The collaboration aims to eliminate overlapping jurisdiction and duplicative registration requirements. Immediate joint priorities include drafting rules for tokenized collateral and evaluating safe harbor provisions for blockchain software developers.
Beyond crypto-specific reforms, Director Moloney outlined broader corporate reporting modernization as part of a "Disclosure Day" initiative. This includes a potential shift from quarterly to semi-annual financial reporting for companies and the implementation of HFIAA reforms, requiring directors and officers of Foreign Private Issuers to comply with Section 16 reporting requirements starting March 18, 2026.
If implemented, Project Crypto could significantly reduce compliance uncertainty, clarify jurisdictional disputes, and provide clearer pathways for asset classification and network evolution, marking a potential end to an era dominated by courtroom battles and enforcement-driven policymaking.
