Securities and Exchange Commission (SEC) Chair Paul Atkins has unveiled plans to create a formal “token taxonomy”—a framework designed to clarify which digital assets should be classified as securities under U.S. law. The initiative marks a major step in the SEC’s ongoing effort to modernize its approach to cryptocurrency regulation and provide clearer guidance for developers, investors, and exchanges.
Atkins outlined the proposal during remarks at the Federal Reserve Bank of Philadelphia’s Fintech Conference on Wednesday. He explained that the taxonomy will be grounded in the Howey Test, a legal standard derived from a 1946 Supreme Court case that the SEC uses to determine whether an asset qualifies as a security.
“In the coming months, I anticipate that the Commission will consider establishing a token taxonomy anchored in the longstanding Howey investment contract analysis,” Atkins said. “There are limiting principles to our laws and regulations, and we must apply them with precision.”
Atkins emphasized that a cryptocurrency’s regulatory classification may change over time as its underlying network matures and decentralizes.
“Networks mature. Code is shipped. Control disperses,” he said. “At some point, purchasers are no longer relying on the issuer’s managerial efforts—and many tokens now trade without any expectation that a particular team remains in control.”
A Shift in Regulatory Tone
The move represents a significant departure from the enforcement-heavy approach taken under former SEC Chair Gary Gensler, whose tenure saw a string of high-profile actions against crypto firms. Under Atkins, the Commission has dropped several investigations and launched “Project Crypto,” an internal effort to refresh the SEC’s rulebook for digital assets.
However, Atkins made it clear that this shift does not signal a softer stance on wrongdoing.
“Let me be clear—this is not a promise of lax enforcement,” he stated. “Fraud is fraud.”
Atkins reaffirmed that tokenized securities—traditional assets such as stocks issued or traded on a blockchain—will still fall under the SEC’s jurisdiction. At the same time, he indicated that the Commission is exploring new regulatory pathways, including potential exemptions and interoperability between agencies.
Bridging Gaps Between Regulators
Atkins also revealed that the SEC is considering proposals that would allow certain crypto tokens tied to investment contracts to trade on non-SEC-regulated platforms, such as those registered with the Commodity Futures Trading Commission (CFTC) or state-level regulators.
In addition, he directed Commission staff to explore exemptions that could establish a tailored offering regime for crypto assets—potentially easing compliance burdens for smaller or emerging blockchain projects.
Complementing Congressional Efforts
While Congress continues to debate multiple versions of a federal crypto market structure bill, Atkins said the SEC’s initiative is intended to work in parallel with legislative efforts rather than compete with them.
“What I envision aligns with legislation currently being considered by Congress,” Atkins said. “Our work aims to complement, not replace, Congress’s critical efforts.”
Lawmakers have been advancing different versions of crypto regulation in both the House and Senate, with the most recent proposal emerging from the Senate Agriculture Committee earlier this week.
Looking Ahead
Atkins’ proposed “token taxonomy” could become one of the most consequential developments in U.S. crypto regulation to date—offering long-awaited clarity in an industry that has often operated in legal gray areas. While the framework remains in its early stages, its focus on clear definitions, compliance flexibility, and inter-agency cooperation could help balance innovation with investor protection.
As the SEC refines its approach, the initiative signals a potential new era of constructive engagement between regulators and the crypto sector—an outcome many in the industry have long called for.
