SEC launches Project Crypto to modernize digital asset rules, simplify token offerings, and boost blockchain innovation in the United States.
In a major step toward modernizing the regulation of digital assets, the United States Securities and Exchange Commission (SEC) has announced the launch of “Project Crypto.” SEC Chairman Paul S. Atkins has taken the lead in this effort, which is to redefine the regulation of crypto assets and blockchain technologies under federal laws. The announcement was made by the American leadership at the digital finance revolution conference held in Washington.
Project Crypto Proposes Asset Classification, Token Rules, and DeFi Governance
The new project identifies some major areas of reform. These involve the classification of assets, issuance of tokens, digital custody regulations, trading regulations, integration of securities and non-securities markets, and governance of decentralized finance (DeFi). The SEC will also consider ways of regulating so-called super-apps, which are digital platforms offering a range of financial services using a single license.
Chairman Atkins underlined the necessity of moving beyond the old regulation models that are off-chain to more on-chain adaptable through blockchain. He said that the SEC has to revise the conventional notion of assuming that every financial system needs intermediaries. In other instances, blockchain enables direct transactions to be made, and thus there is no need to have such intermediaries.
One of the primary goals of Project Crypto is to establish a taxonomy that is well understood of digital assets. As an example, cryptocurrencies may fall under digital collectibles, commodities, stablecoins, or securities. Upon the definition of these categories, the SEC will analyze the real economic purpose of each of these transactions. If a digital asset has the characteristics of a security, then it should be nurtured through modernized frameworks that will allow it to flourish in the American markets.
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New SEC Plan Aims to Ease Token Offering Rules for U.S. Developers
Another important aspect is the treatment of token offerings and airdrops. Historically, American developers and investors have hesitated to invest in such things, as there is uncertainty in regulation and penalties. The SEC can also come up with safe harbor provisions and exemptions under the new plan. These would give clean projects a chance to work in the United States without the dangers of prosecution to enable innovations in the country.
Another problem that was discussed by Chairman Atkins is the tokenization of such traditional assets as stocks and bonds. Currently, there is a growing interest among U.S. companies to tokenize these assets abroad since domestic regulations are complicated. The SEC plans to change this trend by making these requirements simpler and encouraging innovation in the country, and thus reinstating business in the American market.
Another area of interest was super-apps. Such platforms may be issued to bundle broker-dealer, trading venue, staking provider, and lending functions into a single entity. Atkins suggested that with proper regulation, these entities would not have to be licensed at the dozens of state and federal levels. The strategy would enable companies to grow more effectively and stay compliant.
Other regulators will also be coordinated by the SEC. As an example, crypto assets that are not securities might be managed by the Commodity Futures Trading Commission (CFTC). This allows platforms regulated by the CFTC to offer services outside the SEC’s jurisdiction. As a result, it helps create a more balanced regulatory environment.
Lastly, an exemption on innovation will be discussed by the Commission on new digital products. This proposal would allow both registered and unregistered firms to issue offerings based on rules. Such regulations would involve reporting as a regular occurrence and all the tokenized operations would be compliant.
