US SEC Chairman Paul Atkins Unveils Plan for Crypto Token Classification
The US Securities and Exchange Commission (SEC) is considering a new framework for classifying digital assets, according to Chairman Paul Atkins. This move aims to provide clarity on which cryptocurrencies are considered securities and which are not. Atkins emphasized the importance of a token taxonomy “anchored in the longstanding Howey investment treaty” to distinguish between different types of digital assets.
During a speech at the Federal Reserve Bank of Philadelphia, Atkins discussed “Project Crypto,” an initiative introduced by the agency earlier this year as part of a new regulatory shift under President Donald Trump. The goal is to outline which cryptocurrencies are covered by securities law and which are not, with the SEC seeking to pursue this approach as ongoing legislative efforts gain broader support in Congress.
Token Taxonomy: A New Approach
Atkins outlined four categories of digital assets: digital goods or network tokens, digital collectibles, digital tools, and tokenized securities. This classification will help form a “coherent token taxonomy,” according to the SEC Chairman. The framework is the result of months of roundtable discussions, over a hundred meetings with market participants, and hundreds of written contributions from the public.
According to this classification, digital goods or network tokens, digital collectibles, and digital tools are not considered securities. Buyers of these assets do not expect “profits from the significant management efforts of others.” However, tokenized securities are considered securities because they represent ownership of a financial instrument.
Key Takeaways
The SEC’s proposed framework aims to provide clarity on the classification of digital assets, with a focus on the Howey investment treaty. Key takeaways from Atkins’ speech include:
- Digital goods or network tokens, digital collectibles, and digital tools are not securities.
- Tokenized securities are securities because they represent ownership of a financial instrument.
- Not every token that meets investment contract classification at the time of its sale will remain a security forever.
Atkins emphasized that once the investment contract can be deemed to have run its course, the token can continue to be traded, but these transactions are no longer “securities transactions” based solely on the token’s creation history.
For more information on the SEC’s plan for crypto token classification, visit https://crypto.news/sec-chair-paul-atkins-plan-crypto-token-classification/
