President of the SEC Paul Atkins announced plans to introduce a “token taxonomy,” a new regulatory framework aimed at defining which digital assets are considered securities under U.S. law.
What happened: Speaking Wednesday at the Federal Reserve Bank of Philadelphia’s Fintech Conference, Atkins said the initiative would be based on the Howey test, the long-standing legal benchmark for identifying investment contracts.
Key elements of the proposal include:
- Allow certain investment-related tokens to be traded on platforms not regulated by the SEC, such as those overseen by the CFTC or state regulators.
- Introduction of exemptions for crypto assets linked to investment contracts.
- Create a licensing framework for “super-apps” that can manage the trading and custody of multiple asset types under one roof.
Atkins stressed that the taxonomy is intended to complement Congress’s efforts to pass broader crypto legislation, not replace them, The Block reported.
Several market structure bills are currently moving through the House and Senate.
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Why it’s important: Under Atkins, the SEC took a position markedly different from former Chairman Gary Gensler’s tough approach.
The agency launched “Project Crypto,” an initiative to modernize digital asset oversight and streamline compliance.
Atkins, working alongside Commissioner Hester Peirce, said some tokens may start out as securities but lose that classification as their networks become decentralized and issuer control diminishes, a concept long debated in crypto circles.
He cautioned, however, that the new framework “is not a promise of lax enforcement,” reaffirming that fraud and manipulation will still face strict penalties.
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