SEC Chair Paul Atkins has announced plans to introduce a "token taxonomy", a new regulatory framework aimed at defining which digital assets qualify as securities under U.S. law.
What Happened: Speaking at the Federal Reserve Bank of Philadelphia's Fintech Conference, on Wednesday, Atkins said the initiative will be grounded in the Howey Test, the long-standing legal benchmark for identifying investment contracts.
Key elements of the proposal include:
- Allowing certain investment-linked tokens to trade on non-SEC regulated platforms such as those overseen by the CFTC or state regulators.
- Introducing exemptions for crypto assets tied to investment contracts.
- Creating a licensing framework for "super-apps" that can handle trading and custody for multiple asset types under one umbrella.
Atkins emphasized that taxonomy is meant to complement Congressional efforts to pass broader crypto legislation, not replace them, The Block reported.
Multiple market structure bills are currently progressing through both the House and Senate.
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Why It Matters: Under Atkins, the SEC has taken a markedly different stance from former Chair Gary Gensler's enforcement-heavy approach.
The agency has launched "Project Crypto," an initiative to modernize digital asset oversight and streamline compliance.
Atkins, working alongside Commissioner Hester Peirce, said some tokens may begin as securities but lose that classification as their networks decentralize and the issuer's control diminishes, a concept long debated in crypto circles.
However, he cautioned 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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