SEC Reshapes Crypto with New Token Classification

The U.S. Securities and Exchange Commission (SEC) is preparing to initiate a significant transformation in the cryptocurrency industry. The new token classification announced by SEC Chairman Paul Atkins aims to eliminate years of uncertainty regarding how crypto assets will be regulated.

During his speech at the Federal Reserve Bank of Philadelphia's Fintech Conference, Atkins announced that the SEC is working on a new "token taxonomy" based on the Howey Test. This new approach will create a clear framework for determining under which conditions crypto assets will be considered securities. Atkins emphasized that while cryptocurrencies could initially be evaluated under the investment contract framework, this status could change over time.

Additionally, Atkins reminded that many tokens are now trading "without relying on a team," noting that evolving networks and distributed code have reduced the control of developer teams. This offers crypto companies an opportunity to escape regulatory uncertainty and to obtain a clearer roadmap.

While expressing that the new framework provides a clearer vision of regulation, the SEC cautioned that this does not mean a softer oversight. He indicated that assets tied to investment contracts, such as tokenized stocks, would still fall under the category of securities, while emphasizing that fraudulent and malicious activities would be prosecuted.

Atkins also revealed that a directive had been issued to allow investment contract-based tokens to trade on platforms outside of the SEC. Furthermore, he provided the good news that special exemption packages may be prepared for crypto assets. Although there is currently no comprehensive cryptocurrency law in Washington, the SEC's actions aim to parallel progress with market structure proposals in Congress.

Atkins stressed that the SEC's goal is not to overshadow the legislative process but to complement it. The new regulatory period could offer a more predictable framework for both crypto companies and investors in the U.S. However, the statements indicating that oversight and sanctions will not be relaxed suggest that the SEC will adopt an approach that “provides clarity while maintaining rigor.”