Securities and Exchange Commission (SEC) Chairman Paul S. Atkins announced “Project Crypto” on Thursday, a sweeping initiative aimed at modernizing securities regulations to establish American dominance in the global digital asset markets. Speaking at the America First Policy Institute, Atkins declared that the project would serve as the SEC’s “north star” in supporting President Trump’s goal of making the U.S. the “crypto capital of the world.”
The announcement signals a dramatic departure from the previous administration’s “regulation-by-enforcement” approach, which Atkins claimed had crippled innovation and driven businesses offshore.
“The world to go on notice that under my leadership, the SEC will not stand idly by and watch innovations develop overseas while our capital markets remain stagnant,” Atkins stated. “America must do more than just keep pace with the digital asset revolution. We must drive it.”
A New Framework for Digital Assets
Project Crypto is built upon recommendations from the President’s Working Group on Digital Asset Markets and the recently signed GENIUS Act for stablecoins. Chairman Atkins has directed SEC staff to swiftly draft clear and simple rules for crypto asset distribution, custody, and trading.
Key pillars of the initiative include:
- Clarifying the “Howey Test”: A top priority is creating bright-line rules to help entrepreneurs determine if a digital asset is a security. Chairman Atkins asserted, “most crypto assets are not securities.”
- Onshoring Capital Formation: The SEC will propose new regulations for Initial Coin Offerings (ICOs), airdrops, and network rewards to encourage these activities within the U.S. “The days of convoluted offshore corporate structures, decentralization theater, and confusion over security status, are over,” Atkins said.
- Modernizing Custody Rules: The project will overhaul custody requirements for registered intermediaries, moving away from restrictive policies like SAB 121. Atkins stressed the importance of both self-custody as a “core American value” and providing clear rules for firms that custody assets for investors.
Unleashing Innovation with “Super-Apps” and DeFi
One of the core objectives of Project Crypto is to create new, combined business models. Atkins was a proponent of the idea of “super-apps,” in which one licensed entity, such as a broker-dealer, would be able to trade traditional securities, crypto securities, and non-security tokens, along with staking and lending services.
“We should not force market participants to be stretched to fit a Procrustean bed of regulation for regulation’s sake,” he explained.
In addition, the SEC will endeavor to revise “ancient” rules to support on-chain software systems, such as decentralized finance (DeFi) protocols, including automated market makers (AMMs). This means that there could be potential revisions to rules like Regulation NMS that will enable intermediated and purely decentralized market structures to innovate.
To drive development, Atkins also tested the concept of an “innovation exemption,” a sandboxing environment in which new business models can go to market quickly on principles-based terms instead of prescriptive requirements.
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