In a move signaling forthcoming regulatory frameworks for the digital asset industry, the Chair of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, outlined plans to modernize how the agency approaches cryptocurrency oversight. During a speech at the Federal Reserve Bank of Philadelphia, Atkins detailed efforts to clarify the classification of tokens and improve enforcement strategies amid evolving crypto markets, including provisions for pending legislation in Congress.

SEC Chair Paul Atkins announced plans to develop a token taxonomy grounded in the Howey test, aiming to better distinguish securities from non-securities within the crypto space.
The agency intends to differentiate between tokens that are securities and those that are digital commodities or collectibles, which could impact the regulatory landscape for DeFi, NFTs, and crypto trading platforms.
Atkins emphasized the importance of tailored regulation and potential exemptions for certain crypto assets linked to investment contracts, aligning with proposed legislative efforts.
The SEC remains committed to enforcement against fraud, even as it seeks to adapt its approach to digital assets amid legislative and political developments.
Despite the ongoing government shutdown, discussions in Congress around a market structure bill continue to make progress, highlighting the political will to regulate the crypto industry effectively.

In his remarks, Atkins highlighted that a clearer classification methodology is critical for the growth of the cryptocurrency market, especially as digital tokens evolve beyond initial security offerings. He stated that the SEC plans to consider establishing a token taxonomy in the coming months, anchored in the Howey test — the standard used to determine whether a digital asset qualifies as a security. This initiative aims to recognize that investment contracts can cease to be securities once their underlying promise has been fulfilled, allowing tokens to trade freely without falling under securities regulation.

According to Atkins, tokens such as digital commodities, collectibles, and network tools would not be considered securities, thus remaining outside SEC jurisdiction. Conversely, tokenized securities will continue to be subject to SEC oversight, ensuring investor protection remains a priority. He also expressed hope that legislation before Congress would introduce specific exemptions to create a more tailored regulatory regime for certain crypto assets involved in investment contracts.

Addressing the ongoing efforts in shaping crypto regulation, Atkins assured that enforcement against fraud remains a core focus. “Fraud is fraud,” he emphasized, underscoring that the SEC’s mission to protect investors does not diminish even as regulatory approaches evolve to accommodate digital assets.

Market structure bill advances amid government shutdown

Despite the federal government shutdown as of Wednesday afternoon, legislative discussions persist. Lawmakers in the House are scheduled to vote on a funding bill that was already approved by the Senate, aimed at keeping the government operational through the end of January. This could allow continued bipartisan momentum on establishing a comprehensive regulatory framework for digital assets, including the proposed crypto market structure bill.

The Senate remains actively engaged in negotiations, with some senators reportedly reviewing draft legislation related to crypto markets. On Monday, the Senate Agriculture Committee released a discussion draft of its version of the bill, signaling progress in crafting tailored rules for digital assets — a significant step toward formalizing the U.S. regulatory landscape for cryptocurrency and blockchain innovations.