- SEC introduces token taxonomy to clarify crypto asset classification
- Four categories not considered securities: digital commodities, collectibles, tools, and payment stablecoins
- Only “digital securities” remain under SEC jurisdiction
- New safe harbor proposal aims to support crypto innovation and capital formation
- Investment contract clarity defines when SEC oversight begins and ends
Paul Atkins has officially announced on X
Paul Atkins has officially announced a significant shift in how the U.S. Securities and Exchange Commission (SEC) approaches crypto asset regulation. The announcement was shared both on X and through the SEC’s official website.
In a detailed speech, Atkins stated that the SEC is implementing a token taxonomy and updated interpretation of investment contracts, aiming to resolve longstanding uncertainty in the crypto market.
For over a decade, industry participants have sought clarity on when crypto assets fall under federal securities laws. According to Atkins, that ambiguity is now being addressed.
Four Crypto Categories Excluded From Securities Laws
The SEC’s new interpretation introduces four categories of crypto assets that are not considered securities:
- Digital commodities
- Digital collectibles
- Digital tools
- Payment stablecoins (under the GENIUS Act)
With this classification, the SEC narrows its jurisdiction to a single category: digital securities, defined as traditional financial securities that are tokenized. This move is intended to refocus the agency’s role on its core mandate – protecting investors in securities transactions.
Investment Contract Clarity Under Howey
A central element of the framework is clarification around the investment contract definition, based on the Howey Test.
The SEC emphasized that:
- Investor reliance must be based on explicit and clearly disclosed promises
- These promises must relate to essential managerial efforts by project teams
- Once those efforts are completed or cease, the asset may no longer fall under securities laws
This introduces a clearer endpoint for regulatory oversight, something previously lacking in crypto enforcement.
Safe Harbor Framework Inspired by Hester Peirce
SEC Chairman Paul Atkins credited Hester Peirce for shaping the direction of the agency’s evolving crypto framework, particularly her 2020 Token Safe Harbor proposal. Building on that foundation, the SEC is now considering a broader initiative called “Regulation Crypto Assets,” which would introduce structured pathways for crypto innovation.
This includes a startup exemption allowing projects up to four years to develop with a fundraising cap of $5 million and required public disclosures, as well as a fundraising exemption permitting up to $75 million annually with financial reporting obligations. Additionally, an investment contract safe harbor would apply once managerial efforts are completed or cease, providing legal certainty on when a crypto asset no longer falls under securities classification.
Coordination With CFTC and Legislative Backing: Atkins also highlighted upcoming collaboration with the Commodity Futures Trading Commission (CFTC) to implement the framework effectively. He emphasized that Congress must ultimately establish a permanent structure, referencing bipartisan efforts such as the CLARITY Act. He noted that such legislation could soon reach Donald Trump for approval.
A Turning Point for U.S. Crypto Policy
The SEC plans to release formal proposals for public comment in the coming weeks, inviting input from developers, investors, and academics. Atkins described the initiative as “a beginning, not an end,” signaling ongoing regulatory evolution rather than a final framework.
The announcement marks one of the most comprehensive efforts yet to align crypto innovation with existing securities law, while attempting to reduce regulatory uncertainty that has long challenged the industry. Tim Scott recently said that negotiations on a U.S. crypto market structure framework are making steady progress in Congress.
