SEC Initiates Project Crypto to Transition Markets to Blockchain
The U.S. Securities and Exchange Commission is entering the distributed record age with a bold new project named Project Crypto. Led by Chair Paul Atkins, the agency’s goal is to modernize financial markets by transitioning essential infrastructure such as trading, custody, and fundraising to both public and permissioned blockchains. The initiative is ambitious, mirroring the magnitude of the challenges it’s seeking to tackle.
Atkins Aims to Eliminate Outdated Regulations
During his address at the America First Policy Institute, Atkins didn’t long-term holding back. He stated clearly: U.S. markets are constrained by analog-era regulations that don’t apply to digital assets. With Project Crypto, the SEC intends to create a set of rules that aligns with the current functioning of crypto, rather than adhering to the practices of traditional finance from five decades ago. It’s a strong indication that regulators are beginning to align with the industry’s current realities.
#BREAKING:
SEC Chair Paul S. Atkins has just revealed “Project Crypto,” a framework aimed at positioning the U.S. as the leading hub for crypto and transitioning the U.S. financial markets on-chain.
— Subjective Views (@subjectiveviews) July 31, 2025
Identifying Securities Among Tokens
A significant challenge in the crypto space has always been distinguishing whether a crypto token is a security. With this new initiative, the SEC plans to establish explicit criteria for this differentiation. Atkins contends that most crypto assets should not be universally classified as investment contracts. Rather than resorting to enforcement immediately, the SEC will provide guidance for developers and issuers to steer clear of potential legal complications.
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Tokenized Assets and Crypto Super-Apps Receive Approval
Project Crypto will also promote the development of tokenized financial instruments—think stocks, funds, and even ETFs traded directly on-chain. These offerings would function within regulated platforms that offer custody, trading, lending, and various other services under one umbrella. Atkins suggested that this approach could alleviate state-by-state licensing issues and enable the U.S. to rival global financial centers that have already embraced these advancements.
Facilitating ICOs, Airdrops, and Other Fundraising Strategies
The SEC is also evaluating new exemptions and safety provisions for widely used crypto fundraising techniques such as ICOs and airdrops. If these are approved, startups will have more flexibility in raising funds without getting entangled in excessive crypto law. The objective is to attract token launches back to the U.S. rather than forcing them to go abroad due to legal ambiguities.
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Custody Regulations Adapt to Modern Needs
The methods for storing and securing digital assets have progressed, and the SEC appears prepared to catch up. Project Crypto outlines plans to refresh custody regulations, allowing for both self-custody wallets and institutional service providers. This could eliminate a significant compliance hurdle for companies aiming to serve U.S. investors while employing contemporary security practices.
Derived from Broader White House Guidelines
This entire initiative is part of a broader digital asset policy initiative from the White House. A comprehensive 160-page plan established essential priorities like classifying tokens, enhancing Decentralized finance oversight, and nurturing innovation. The SEC is now working to convert these concepts into actionable changes that can redefine how digital assets are handled nationwide.
Looking Ahead
The SEC aims to begin drafting proposals in the coming months. This may include formal regulatory amendments, updated definitions, or even temporary leniency for certain actions. What’s evident is that Atkins intends to expedite this process, cutting through the outdated regulations that have hindered crypto’s expansion in the U.S.
A Shift from the Traditional SEC Approach
For years, the SEC has primarily focused on enforcement actions. Project Crypto alters this paradigm. Atkins envisions the agency as a facilitator rather than an obstacle. Rather than enforcing regulations through lawsuits, the SEC intends to provide genuine resources and pathways for crypto law. This alone signifies a notable shift in approach.
Project Crypto may signal the beginning of a more equitable method of regulating digital assets in the U.S. With more defined guidelines and minimized legal risks, the crypto sector could finally thrive within the American framework instead of around it.
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Essential Insights
- The SEC initiated Project Crypto to transition key trading market activities such as trading, custody, and fundraising to blockchain-based frameworks.
- Chair Paul Atkins remarked that traditional regulations are no longer suitable for modern crypto markets, advocating for a rulebook that mirrors the reality of digital assets today.
- Project Crypto encompasses clearer guidelines on token classifications, backing for tokenized equities, and on-chain fundraising methods like ICOs and airdrops.
- Custody laws will be revised to allow both institutional custodians and self-custody wallets utilized by individual investors.
- The SEC is shifting away from a regulation-by-enforcement stance, providing tangible resources and legal clarity to ensure crypto innovation remains within the U.S. borders.
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