SEC Chair Outlines Future of Digital Asset Regulation Amid Legislative Developments

According to Cointelegraph, U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins recently addressed the agency's strategy for managing digital asset fraud under its 'Project Crypto' initiative. Speaking at the Federal Reserve Bank of Philadelphia, Atkins elaborated on the SEC's plans to update its regulatory framework for digital assets. He emphasized the potential establishment of a 'token taxonomy' based on the Howey test, which the SEC uses to determine what constitutes a security. This approach aims to acknowledge that investment contracts may eventually conclude, allowing tokens to continue trading without being classified as securities. Atkins highlighted Commissioner Hester Peirce's observation that while a token launch might initially involve an investment contract, the nature of these contracts can evolve. Once an investment contract is deemed complete, the token may still trade, but such trades would not be considered securities transactions. Atkins also noted that during his tenure, he would classify digital commodities, collectibles, tools, and network tokens as outside the SEC's jurisdiction, whereas 'tokenized securities' would remain regulated by the agency. Looking ahead, Atkins expressed hope that the SEC would consider a set of exemptions to create a tailored offering regime for crypto assets linked to investment contracts, as proposed in current congressional legislation. He clarified that this does not imply lenient enforcement, stating, 'Fraud is fraud.' While the SEC's role is to protect investors from securities fraud, other federal bodies are equipped to address illicit activities. Despite the ongoing U.S. government shutdown, legislative progress continues. The House of Representatives is expected to vote on a funding bill, already approved by the Senate, to extend government funding through January. During the shutdown, the Senate remained active, with some senators negotiating the market structure bill. Recently, Republican leaders from the Senate Agriculture Committee released a discussion draft of their version of the bill, indicating forward movement.