Project Crypto by US SEC: What’s Inside

Project Crypto by US SEC

The U.S. Securities and Exchange Commission (SEC) launched “Project Crypto,” a policy initiative aimed at bringing traditional financial markets onto blockchain-based systems. Announced by SEC Chair Paul Atkins at the America First Policy Institute in Washington, D.C., this move marks a significant regulatory shift in the treatment of digital assets and market infrastructure in the U.S.

The project is aligned with President Donald Trump’s stated goal of making the U.S. the “crypto capital of the world,” and it introduces several new priorities for how digital assets will be regulated and supported going forward.

“To achieve President Trump’s vision of making America the crypto capital of the world, the SEC must holistically consider the potential benefits and risks of moving our markets from an off-chain environment to an on-chain one,” SEC chair Paul Atkins said.

Bridging Traditional Markets and Blockchain Technology

In his speech, Chair Atkins said many SEC rules are outdated, designed in a pre-internet era. He argued that they should not be used to force traditional intermediaries—like brokers or custodians—into systems that may not need them. Instead, the SEC will begin updating these legacy rules to reflect blockchain-enabled, or “on-chain,” market systems.

These updates aim to:

• Facilitate digital asset classification
• Provide legal clarity for tokenized securities
• Modernize crypto custody laws
• Support the growth of so-called “super apps”
• Encourage U.S.-based innovation and reduce regulatory burden

This approach reflects a broader shift from the SEC’s prior stance, which often relied on enforcement actions and lacked regulatory clarity. Now, the commission is taking a proactive, policy-first approach.

Digital Asset Classification and Tokenization Clarity

One of the most important aspects of Project Crypto is the SEC’s acknowledgment that most cryptocurrencies are not securities. This contradicts earlier interpretations that placed nearly all digital tokens under securities law, often leading to legal disputes and uncertainty for developers and investors.

Chair Atkins stated that the SEC would issue formal guidelines to clearly define:

• What constitutes a security token
• What qualifies as a commodity
• Which tokens are exempt from current registration laws

This is especially relevant as U.S.-based crypto companies have moved offshore to avoid unpredictable enforcement. Tokenized securities, stablecoins, and other blockchain-based financial products will be given clearer rules for lawful issuance and trading.

Crypto Custody and the Right to Self-Custody

Another key announcement involves self-custody. Atkins emphasized that Americans have the right to hold their own digital assets without relying on third-party custodians. This statement is important, especially for wallet providers and users of decentralized finance (DeFi) platforms.

Under Project Crypto:

• The SEC will adapt custody rules to include digital wallets and key management systems.
• Custodians will be regulated, but individuals will not be required to use them.
• Regulations will support both centralized and decentralized custody options.

This shift acknowledges that crypto asset holders should have the same ownership rights as those who hold traditional securities, while also addressing concerns around security and fraud prevention.

Super Apps and Streamlined Licensing

The SEC is also planning to support “super apps”—multi-functional platforms that offer users access to a wide range of financial services from one interface. Examples include:

• Coinbase’s new Base App
• Robinhood’s securities + crypto platform
• Kraken’s combined trading app

These apps often allow users to access both crypto and traditional financial products, such as tokenized stocks and bonds.

Under the new plan, the SEC will work to:

• Simplify licensing structures for these platforms
• Reduce overlap between regulatory agencies
• Allow apps to offer both securities and non-securities without conflicting oversight

Chair Atkins mentioned that current regulations subject such apps to multiple, conflicting jurisdictions. Streamlining these requirements would make the U.S. more attractive for crypto development and improve user experience.

Ending Regulation by Enforcement

Under Chair Atkins, the SEC has moved away from “regulation by enforcement”—a practice where unclear rules were enforced retroactively. Instead, Project Crypto focuses on:

• Pre-approval of crypto-related ETFs
• Issuance of guidance documents (e.g., staking income not being a security)
• Clear pathways for legal token launches and DAOs

This aligns with recent recommendations from the White House Digital Asset Working Group, which called for more regulatory coordination and grace periods for early-stage crypto projects.

Shared Oversight with the CFTC

Project Crypto also supports dual regulatory oversight of the crypto sector:

• The SEC will continue to handle securities-related crypto products
• The CFTC will have full authority over spot crypto markets (e.g., Bitcoin, Litecoin)

This clear division of responsibility is expected to reduce conflicts between the two agencies and provide better legal footing for crypto exchanges operating in the U.S.

Technical and Legal Developments Backing the Project

Since Project Crypto was initiated:

• The SEC approved in-kind creations and redemptions for crypto ETFs
• It clarified tax rules for staking income on proof-of-stake chains
• It issued guidance supporting on-chain software systems and DeFi platforms
• It publicly backed updates to its rules to reflect tokenized financial infrastructure

In short, Project Crypto is not just a speech or a policy outline—it is already being implemented through concrete decisions and rule updates.

FAQ

1. What is Project Crypto by the SEC?
   Project Crypto is a U.S. SEC initiative to modernize securities law and support blockchain-based financial markets through clear regulation, custody rights, and digital asset guidelines.

2. Does the SEC consider all cryptocurrencies to be securities?
   No. Chair Paul Atkins stated that most cryptocurrencies are not securities and that the SEC will release formal guidance to clarify which tokens fall under securities law.

3. Will Project Crypto affect crypto custody rules?
   Yes. The SEC plans to modernize custody rules to include digital wallets and self-custody, ensuring Americans can hold their crypto assets directly if they choose.

Conclusion: What Project Crypto Means in Practice

Project Crypto signals a new regulatory approach in the U.S., with the SEC actively working to:

• Update outdated rules for modern on-chain financial systems
• Create clear and consistent guidelines for digital assets
• Support innovation without forcing intermediaries or centralized custodians
• Streamline compliance for trading platforms and financial apps

Rather than speculating about future promises, Project Crypto focuses on making current systems more compatible with blockchain technology. The changes aim to keep crypto businesses in the U.S., promote user rights like self-custody, and modernize oversight across the financial sector.

Resources:

1. Statements by US SEC Chair Paul Atkins: https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125

2. CNBC Report: https://www.cnbc.com/2025/07/31/sec-debuts-project-crypto-to-bring-us-financial-markets-on-chain.html

3. Fortune report: https://fortune.com/crypto/2025/07/31/the-sec-just-unveiled-project-crypto-what-you-need-to-know/