The SEC chairman may end a decade-long saga of uncertainty surrounding token regulation in the United States.

Author: Zhang Feng

In the wave of digital assets sweeping the global financial system, the U.S. Securities and Exchange Commission (SEC) has long been regarded as the most controversial and influential regulatory force in the crypto world. Its uncertain stance, strict interpretation of the definition of "securities," and frequent enforcement actions have made it difficult for innovators and investors to navigate through the fog.

However, a fundamental shift is underway. In his speech entitled "Project Crypto" on November 12, 2025, SEC Chairman Paul S. Atkins not only clearly responded to the market's thirst for regulatory certainty but also proposed a new regulatory paradigm based on "economic substance" rather than "technical labels."

The core of this shift lies in no longer viewing every technological innovation as suspicious, but rather acknowledging that the lifecycle of investment contracts may end, thus clearing the final institutional hurdle for the compliance path of tokens. I. Clear Regulation in Response to Uncertainty: Ending the "Decade of Fog" Over the past decade, the most frequently asked question in the crypto market has been: "Is this token a security?" However, this question reflects the systemic confusion caused by regulatory ambiguity. In his speech, Atkins frankly admitted that "crypto assets" are not a legal term in securities law, but rather a technical description. The key issue is not the technical form, but the "legal rights" and "economic substance" they embody. For a long time, market participants have been trapped in a rigid cognitive bias: once a token is identified as part of an "investment contract," it is forever labeled a "securities," and every subsequent transaction must comply with securities regulations. This "once a security, always a security" view not only lacks legal basis but also seriously deviates from the realities of digital asset development. Atkins explicitly points out that this view is "unsustainable, impractical, costly, and yields little benefit," directly leading to the outflow of innovation to jurisdictions with clearer regulations. Therefore, the SEC will reshape its regulatory framework with "clear boundaries" and "easy-to-understand language" to respond to the market's fundamental need for certainty. This statement marks a shift in the SEC's approach from "enforcement-led" to "rule-led," and from "post-event accountability" to "pre-event guidance." II. Focusing on Substance over Token Form: Economic Reality Over Technological Labels In constructing the new regulatory framework, Atkins emphasized two core principles: First, the nature of securities is not altered by their form; second, economic reality trumps all labels. This means that regardless of whether an asset exists in the form of a paper certificate, database record, or blockchain token, as long as it essentially represents a claim to corporate profits and relies on the management efforts of others, it falls under the jurisdiction of securities laws. Conversely, even if a token was issued as part of an investment contract, once the contract is fulfilled or terminated, subsequent transactions should no longer be considered securities transactions. This stance returns to the "substance over form" principle established by the U.S. Supreme Court in Howey, abandoning an excessive obsession with technological appearances and instead focusing on the true role of assets in economic activities. III. Classifying Tokens for Different Needs: Building a Unified Token Map To implement the above principles, Atkins proposed a preliminary token classification system, dividing crypto assets into four categories: Digital Goods/Network Tokens: Native tokens in decentralized networks, such as Bitcoin, derive their value from the programmatic operation of the system itself, rather than relying on the management efforts of others, and are not considered securities. Digital Collectibles: Assets such as NFTs representing art, music, and game items are valued for their use or collection, not for investment profits, and are not considered securities. Digital Tools: Tokens with practical functions, such as membership certificates, tickets, and badges, are not considered securities. Tokenized Securities: Tokens representing traditional financial instruments such as stocks and bonds, regardless of their form, are still considered securities. This classification not only responds to the market's urgent need to clarify "which tokens are not securities" but also provides clear guidance for subsequent regulatory and compliance paths. IV. Segmentation of the Process Regarding the Performance of Investment Contracts: Acknowledging the Termination of Contracts Regarding the application of the Howey Test, Atkins proposed a landmark view: Investment contracts can be performed, expire, and terminated. It is not a permanent legal label. He used the historical changes of the Howey citrus orchard as an analogy: the land that was the subject of the investment contract has now become a golf course and residential area, no longer possessing the attributes of a security. Similarly, a token may rely on the "key management efforts" of the development team in the early stages of a project, but as the network matures, code is released, and control is decentralized, the issuer's role gradually diminishes or even disappears. At this point, the life cycle of the investment contract has ended, and the trading of the token no longer constitutes a security transaction. This concept of "contract termination" breaks the long-standing rigid understanding of the "origin" of tokens, providing a compliant exit for many mature public chain tokens and utility tokens. V. Combating Fraud Based on Responsibility Commitments: Enforcement Does Not Lax Due to Classification Although the SEC has shown an open attitude towards classification and exemptions, Atkins has also clearly emphasized: The bottom line of anti-fraud will not change based on asset class. Whether it is securities or commodities, false statements, market manipulation, and embezzlement will be severely punished. He specifically pointed out that even if a token is not a security, the SEC can still pursue liability under anti-fraud provisions if it involves false promises during the sale process. At the same time, the CFTC also has anti-fraud and anti-manipulation authority over commodity-related crypto assets. This illustrates that regulatory flexibility does not equate to leniency. The boundaries of compliance can be broadened, but the bottom line of the law cannot be challenged. VI. Simplifying Processes for Innovation and Value: Making Room for Experimentation and Growth In the final part of his speech, Atkins called on the SEC to introduce a package of exemptions to create a "tailor-made issuance mechanism" for crypto assets. This mechanism aims to streamline compliance processes, lower the barriers to innovation, and allow project teams to focus on product development and user interaction, rather than struggling with regulatory uncertainty. He emphasized that the goal of regulation should not be to "bind the future," but to "serve the people"—including entrepreneurs building solutions, workers investing in the future, and ordinary Americans sharing in the nation's prosperity. The SEC Chairman's speech was not only a systematic response to the regulatory dilemmas of the past decade in crypto, but also a solemn commitment to America's future leadership in financial innovation. It marks a shift in regulatory agencies from "defensive enforcement" to "constructive guidance," and from "technology fear" to "economic rationality." "We will never let fear of the future bind us or trap us in the past." This statement perhaps best encapsulates the new era of crypto regulation in the United States. When regulators begin to acknowledge that investment contracts can be terminated, when tokens are no longer permanently questioned based on their "origin," and when innovators no longer need to worry about vague rules—what we see is not just the removal of a regulatory barrier, but the beginning of a new era: code can grow for innovation, protocols can operate based on community needs, and the law will ultimately protect them rather than hinder them.