- US SEC Chair Paul Atkins unveiled Project Crypto in a recent speech.
- The initiative aims to streamline, clarify, and enhance crypto regulations to address the pain points in digital asset regulation, licensing, and registration.
- The move aligns with the recommendations of the White House crypto policy report and President Donald Trump’s goal of turning the US into the “crypto capital of the world.”
US Securities and Exchange Commission (SEC) Chair Paul Atkins announced “Project Crypto” during a speech on Thursday. The initiative aligns with the recommendations discussed in the recent White House crypto policy report and President Donald Trump’s goal of making America the “crypto capital of the world.”
According to Atkins, the SEC crafted Project Crypto with the guidance of the Crypto Task Force, a group headed by Commissioner Hester Peirce. It also builds on the provisions of the GENIUS Act that Trump signed earlier. The project aims to modernize securities regulations supporting blockchain-based innovations in financial markets.
The chairman noted that they drew inspiration from the lessons learned from the “Paperwork Crisis” that gave rise to the Depository Trust and Clearing Corporation (DTCC). Additionally, he likened it to establishing the Regulation Alternative Trading Systems (Reg ATS) in 1999 to regulate ATS like broker-dealers, instead of exchanges.
Reinforcing the USA’s Dominance in the Golden Age of Finance
Atkins stated that the SEC “will not stand idly by” as innovations overseas happen while the US capital markets stagnate. He emphasized that the agency must “holistically consider” the opportunity costs and risks of moving America’s markets from off-chain rails to on-chain systems.
The chairman claimed that he has instructed the SEC’s policy divisions to draft clear and straightforward rules based on the President’s Working Group (PWG) proposals on Digital Asset Markets. It would focus on crypto asset distributions, custody, and trading.
The Crypto Task Force will work with the group to ensure that the output will lay the foundation for the USA’s transition to a hub for blockchain and crypto startups, digital asset innovations, and capital market participation.
Priorities Under Project Crypto
Atkin’s speech highlighted the SEC’s priorities under Project Crypto. These include the following:
1. Onshoring Crypto Asset
Atkins wants to bring back businesses that have fled the country over the past few years due to the past administration’s stringent rules, “regulation by enforcement” approach, and “Operation Chokepoint 2.0” crusade. It mandated the SEC to create clear guidelines in accordance with the elements of the Howey test to arrive at a clear taxonomy for crypto assets, differentiating them from securities, commodities, stablecoins, and digital collectibles.
The agency will also develop purpose-fit disclosures, exemptions, and safe harbors covering initial coin offerings (ICOs), airdrops, network rewards, and tokenized securities to reduce the burden on investors, avoid confusion, and avoid legal complexities that could result in lawsuits.
2. Enhancing Freedom
Moreover, the draft will zero in on reinforcing the freedom of investors, custodians, and trading venues. It ensures they have “maximum choice” when deciding how and where to custody stake, invest, and trade their crypto assets.
Atkins believes that the previous administration under former chair Gary Gensler has either heavily limited or excluded market participants in the digital assets sector via its SPBD (Special-Purpose Broker-Dealer) framework, SAB (Staff Accounting Bulletin) 121, and Operation Chokepoint 2.0.
3. Facilitating Super-Apps
The SEC plans to make “super-apps” enabling securities intermediaries to offer a broad range of products and services under a single license. This would streamline the application process for broker-dealers with alternative trading systems who want to expand their offerings to crypto trading, staking, lending, and other digital asset-related ventures.
Under the so-called super-apps, applicants will no longer have to register or secure multiple licenses at the federal and state levels. SEC would consolidate them into a unified platform.
4. Unleashing On-Chain Software Systems
Atkins considers the current SEC regulations antiquated. Hence, he ordered the agency’s staff to update them in line with the evolving market.
The chair said the rules must support decentralized and intermediated on-chain systems, such as automated market makers (AMMs) in decentralized finance (DeFi). The overhaul potentially amends Regulation NMS (National Market System) to enable trading of tokenized securities and protect software developers, while ensuring that the market can operate without unnecessary intermediaries.
5. Fostering Innovation
Lastly, the draft would scale the rules based on market participants’ business models and innovative technologies. This way, they would be unburdened by the prescriptive requirements that distort market activity and impede the evolution of the nation’s securities markets.
