Project Crypto: SEC steps-up to modernize U.S. securities rules

The U.S., after passing its stableocin-centered GENIUS Act last week, has moved to clarify SEC’s stance on the distribution, custody, and trading of digital assets. To do so, Paul Atkins, the chairperson of the US Securities and Exchange Commission (SEC) announced a new initiative called “Project Crypto” on Thursday, May 31. The SEC regulates the markets in the U.S. and is responsible for keeping America’s investor community protected.

In his introductory statement, Atkins said this initiative would be “SEC’s north star” in making America the crypto capital of the world. He noted that the recently released crypto policy report by the President’s Working Group (PWG) will make for the backbone for “Project Crypto”.

Atkins explains Project Crypto

The U.S., under President Donald Trump, plans to make digital assets a crucial part in de-stagnating the capital markets in the country. Through Project Crypto, the SEC aims to make Commission-wide changes in the exiting regulations overseeing securities — that include a wide array of financial instruments including stocks, bonds, notes, debentures, and investment contracts among others.

For now, digital assets like crypto are not particularly classified as securities in the U.S. For now, whether a digital asset can be considered as a security is based on a case-by-case analysis using the Howey Test. In the lack of this blanket classification, multiple crypto firms had exited the U.S. market after landing into legal troubles, especially during former President Joe Biden’s administration.

“I am launching Project Crypto and directing the SEC’s policy divisions to work with the Crypto Task Force, led by Commissioner (Hester) Peirce, to swiftly develop proposals to implement the PWG’s recommendations,” Atkins said in his statement. “We will reshore the crypto businesses that fled our country, particularly those that were crippled by the previous administration’s regulation-by-enforcement crusade.”

He highlighted U.S.’ need for a well-drafted regulatory framework to classify crypto assets as securities. These rules, Atkins said, should allow market participants to access flexibility in product designs and let investors earn more through distributions and voting rights.

“Capital formation is at the heart of the SEC’s mission, yet for too long the SEC ignored market demands for choice and disincentivized crypto-based capital raising,” Atkins added.

The SEC’s crypto task force, established by President Trump, will play a key role in defining the next generation of crypto-friendly securities law in the U.S.

Industry reacts to Project Crypto

Following Atkins’ announcement, prominent players from the crypto industry including Solana, Hedera, and Ondo Finance lauded the SEC for taking efforts to include the sector into U.S.’ securities umbrella.

In its report released this week, the PWG had specifically directed the SEC to jump into action and establish clear guidelines around crypto services and engagements from the perspective of market stability and investor safety.