Author: Techub Hot News Express
By Yangz, Techub News
In the crypto industry—where policy and market performance are tightly intertwined—the regulatory moves of the U.S. Securities and Exchange Commission (SEC) have always been a focal point for the entire sector. Last night, SEC Chair Paul Atkins delivered a new speech on the “Project Crypto” initiative, building upon his previously stated pro-innovation regulatory stance by proposing concrete implementation guidelines and a token classification framework. While this statement failed to meaningfully boost the current weak market, it nonetheless stands in sharp contrast to the ambiguous regulatory posture under former Chair Gary Gensler.
This article analyzes the core content of the speech to unpack the new regulatory thinking the current SEC intends to convey regarding digital assets.
Dispelling Myths: From “Identity Confusion” to “Substance-Based Analysis”
For several years, the digital asset market has been trapped in a central myth: “Are cryptocurrencies securities?” Unlike former Chair Gary Gensler’s assertion that “nearly all cryptocurrencies—except Bitcoin—are securities,” Paul Atkins asserted that “most cryptocurrencies traded today are not themselves securities.” More importantly, he directly identified the root cause of this confusion, stating that “crypto assets” is a technical term—not a legal definition. According to Atkins, “crypto assets” describe how value is recorded and transferred but do not inherently specify legal rights or economic substance attached to any particular instrument. Equating a technical description with a legal characterization has been the key driver behind prior regulatory confusion and market uncertainty.
The SEC’s new approach aims to cut through this fog. Its foundational principle is adherence to “economic substance over formal labels.” Regardless of whether an asset is labeled a “token” or an “NFT,” if its substance represents a claim on profits from an enterprise—and if investors’ profit expectations primarily rely on the managerial efforts of others—it falls under securities law. Conversely, a token does not permanently bear the “security” label merely because it was once used in a fundraising activity. This position reverts to the U.S. Supreme Court’s foundational “Howey Test” principle—“substance over form”—and constitutes a clear correction to the ambiguous regulation under Gensler.
Building a Clear Taxonomy: A Regulatory Framework for Token Classification
One of the most notable proposals in this speech is the establishment of a clear token classification system. As described by Paul Atkins, this taxonomy is not invented out of thin air but is grounded in extensive market research, roundtable discussions, and public feedback—designed to reflect the diversity of the digital asset ecosystem:
“Digital Commodities” / “Network Tokens”: These tokens derive value from the programmatic operation of a functional and decentralized crypto system—not from reliance on the essential managerial efforts of others. In Atkins’ view, they are not securities.
“Digital Collectibles”: Designed for collection, use, or representation of specific rights (e.g., art, music, gaming items), their primary purchase motivation is non-investment-oriented, and thus they are not considered securities.
“Digital Utility Tools”: Possessing specific practical functions—such as membership credentials, event tickets, or identity identifiers—their economic substance diverges significantly from investment contracts and therefore they are not securities.
“Tokenized Securities”: Explicitly classified as securities, these are digital assets representing ownership of traditional securities (e.g., stocks, bonds) issued on blockchain infrastructure.
The significance of this classification lies in its recognition of the complexity of the digital asset world—and its refusal to force diverse tokens into a single regulatory box—thereby offering differentiated regulatory expectations for different types of innovation.
A Dynamic Howey Test: The “Lifecycle” Theory of Investment Contracts
Paul Atkins’ interpretation of the “Howey Test” is particularly pivotal. By skillfully invoking the historical evolution of the original Howey case itself, Atkins introduces a dynamic perspective: “investment contracts have lifecycles.” In the Howey case, citrus groves originally used for investment contracts have since become golf courses and residential developments—no one would argue the land itself remains a security. Likewise, a token may constitute part of an investment contract during a project’s early stage, when the development team makes explicit, value-creating commitments. But as the network matures, code is deployed, and control becomes decentralized, the issuer’s core managerial role may diminish—or even vanish entirely. At that point, purchasers no longer reasonably rely on the issuer’s efforts to generate profit, and the investment contract has effectively been fulfilled—or terminated.
This implies that a token’s “security” status is not immutable. Once the commitments underpinning the investment contract have been fulfilled, failed, or otherwise terminated, subsequent token transactions should not automatically be deemed securities transactions. This “lifecycle” theory provides critical legal grounding for projects’ compliant transition—from early-stage fundraising to mature, decentralized networks—and formally corrects Gensler-era rigidity: “once a security, always a security.”
Regulatory Coordination & Legislative Backing: Building a Complete Ecosystem
Paul Atkins’ latest speech on “Project Crypto” does not seek to indefinitely expand the SEC’s regulatory authority. Instead, it demonstrates clear jurisdictional boundaries and a strong willingness to collaborate across agencies.
Chief among these is support for congressional legislation—a core expression of this mindset. Atkins explicitly endorses Congress enacting comprehensive legislation to establish a structural framework for crypto markets. He believes SEC guidance should complement—but not replace—congressional lawmaking, and that the strongest safeguard comes from clear statutory language enacted by Congress, which can effectively guard against potential future shifts in SEC policy.
Second, Atkins advocates for clearly defined regulatory responsibilities and explores hybrid oversight models to “support financial super-apps.” Atkins stated he has directed SEC staff to prepare recommendations permitting tokens tied to investment contracts to trade on platforms regulated by the CFTC or under state-level regulatory regimes—preserving regulatory integrity while reserving reasonable space for innovation.
Conclusion
From the official launch of “Project Crypto” in early August to the increasingly clear token taxonomy and dynamic Howey Test interpretation unveiled today, SEC Chair Paul Atkins’ regulatory thinking—as demonstrated across two speeches—represents a consistent rejection of the adversarial posture and uncertainty characteristic of the Gensler era, and a steady embrace of clarity and flexibility. As Atkins emphasized in his August speech, “Project Crypto” is not merely a regulatory framework—it serves as the “North Star guiding the SEC’s historic effort to help President Trump make America the ‘global crypto capital.’” It will continue to steer U.S. digital asset regulation into the future.
Yet regulatory or policy improvements remain only a necessary—not sufficient—condition for innovation. As industry observers widely note, “this bull market features surprisingly little genuine innovation.” Builders must recognize clearly: fair and rational regulation can remove barriers to innovation—but cannot substitute for innovation itself. It can define the racecourse, but cannot run the race. As Atkins stated in this speech: “The fate of the market—or any specific project—is always determined by the market.”