The SEC is getting ready to take one of its biggest measures yet to make it clearer how federal law classifies digital assets. Paul Atkins, the head of the SEC, said that the agency will soon look into making a new framework, or “token taxonomy,” that would help decide when digital tokens and cryptocurrencies should be considered as securities and when they shouldn’t.
Atkins remarked at the Federal Reserve Bank of Philadelphia’s annual financial technology conference, “In the coming months, I expect the Commission to think about setting up a token taxonomy.” He said that the SEC wants to make the law clearer on one of the most talked-about issues in financial regulation: should cryptocurrencies be subject to the same laws as stocks and bonds?
Atkins stressed that this new classification will be based on “legal reasoning that separates securities from commodities.” To put it simply, the Commission wants to make a clear line between digital assets that act like investments (which would make them securities that the SEC watches over) and those that act more like commodities or utility tokens (which are usually watched over by other regulators, like the Commodity Futures Trading Commission (CFTC)). “This will show that our laws and rules have limits,” Atkins added, stressing that not all digital assets should automatically be subject to securities laws.
The announcement has gotten a lot of attention from both the financial and crypto communities because the question of how to classify digital assets has been going on for years. Many crypto companies have said that the SEC’s approach is inconsistent and too harsh, especially when it was run by someone else. Startups in the U.S. have long been unsure about how to do business legally because there aren’t clear definitions.
The action could also be a turning moment in how the U.S. government sees bitcoin. Donald Trump, who won the presidency after a campaign that got a lot of support from digital asset investors, has said that he is more open to crypto. He has promised to change the rules that many business leaders think are too strict and out of date. It looks like Trump’s administration is set on making the US a worldwide hub for digital finance, which is a big change from the cautious tone that was common throughout the last term.
Atkins’ comments can be interpreted as part of a bigger reset of the rules. His emphasis on a “token taxonomy” fits with Trump’s proposal to update the country’s financial rules to keep up with new technologies. This change signals that the SEC, which is frequently thought of as one of the hardest regulatory organisations in Washington, may now be willing to work with the crypto business, which is something many entrepreneurs have wanted for a long time.
Atkins also said that the SEC is thinking at making a “package” of exemptions just for digital assets that are considered securities. He said that this would make it possible to have a “tailored offering regime” that gives token issuers who follow the rules more freedom. The SEC may make rules that are better for digital assets and startups that want to raise money through blockchain-based tokens instead of using the same onerous reporting and disclosure criteria that big public businesses have to follow.
Atkins said that this strategy would be in line with bills that are currently being written in Congress. Lawmakers are working on laws that would make it clearer what the difference is between securities and commodities, and that would create specific paths for legal crypto offerings. These attempts show that more and more people are realising that traditional financial systems don’t perform effectively in the fast-changing world of digital assets.
A lot of people in the sector see the possibility of clearer rules as a sign of hope. The SEC has sued or taken action against a number of crypto companies over the years for allegedly selling unregistered securities through token sales. Some corporations have moved their operations abroad in search of better legal settings because there isn’t clear direction. The SEC might foster innovation in the U.S. while still protecting investors by creating a clear classification system. This is something that regulators have been trying to do for a long time.
Not everyone, though, thinks that the Commission’s decision will fix the bigger problems between regulation and innovation. Some lawyers have said that developing a token taxonomy is merely the first step. What matters most is how the SEC uses and interprets it in real life. Companies could still be in a legal grey area if the laws are too strict or too open to interpretation.
Some others think the Commission’s choice is long overdue. For years, crypto developers and investors have said that the lack of clear laws makes it hard for people to start businesses. In a discussion after the event, a digital finance lawyer said, “Businesses want to follow the rules; they just need to know what they are.” If the SEC keeps its promise to Atkins, the crypto sector could finally be more certain and legal in the U.S.
Atkins also used his address to repeat President Trump’s recent request that Congress pass comprehensive crypto market structure legislation before the end of the year. This kind of law would set up a single set of rules for exchanges, token issuers, and investors, eliminating the present patchwork of state and federal rules. The change might also help regulators like the SEC and the CFTC by giving them defined, complementary tasks instead of having them all work in the same area.
Atkins’ comments, on the other hand, seemed to reflect a practical and forward-looking stance, even though the way forward is still complicated. He talked about “limiting principles” and “tailored regimes,” which made it sound like he was open to changing the way regulations work instead of using old laws on new technologies. This is a big change in the usually hostile relationship between crypto entrepreneurs and authorities. It shows that they are willing to talk and work together.
People in the wider financial world are keeping a careful eye on these changes. Wall Street firms that have cautiously joined the crypto sector through investment products and custody services might use more information. Clear definitions would let them figure out how much risk they are taking, make sure their products are legal, and trade digital assets with more confidence.
Some critics, on the other hand, are worried that the Trump administration’s pro-crypto posture will make regulation too favourable to businesses, which could make it harder to protect consumers. They say that the SEC’s main job—keeping investors safe and making sure markets are fair—must stay the same even as the agency changes to keep up with new technologies.
The SEC’s next moves will show if it is possible to find a real balance between innovation and accountability. Atkins’ commitment to create a legal classification for tokens marks a new way for the United States to deal with the digital economy. But like with any big shift in policy, the result will rely on how it is carried out, understood, and enforced.
