SEC Announces Token Taxonomy Framework at Conference

SEC Chairman Paul Atkins announced a new regulatory framework, “Token Taxonomy,” at the Philadelphia Fed Fintech Conference to redefine crypto assets as securities using the 1946 Howey Test.

This framework could reshape digital markets by permitting certain tokens to trade on regulated platforms, impacting governance and utility tokens as well as tokenized securities.

SEC Defines Crypto Assets as Securities with Token Taxonomy

SEC Chairman Paul Atkins announced the introduction of the ‘Token Taxonomy’ framework, which aims to redefine when crypto assets are considered securities. The initiative, discussed at the Philadelphia Fed Fintech Conference, highlights the reliance on the 1946 Howey Test to differentiate token attributes based on their developmental stage.

Significant changes include permitting the trading of tokens associated with investment contracts on CFTC or state regulatory platforms. The SEC’s launch of ‘Project Crypto‘ aligns with this framework, considering exemption packages for specific crypto assets.

Market reactions indicated reservation, as the sector anticipates detailed technical criteria from SEC and CFTC. Atkins reiterated that “Tokenized securities remain subject to securities laws and strict enforcement against fraud.” Industry figures, however, held back on immediate commentary, opting to wait for further developments.

Market Reactions to SEC’s New Crypto Framework

Did you know? The 1946 Howey Test has been the cornerstone for determining securities in various contexts, including cryptocurrencies in recent years, showcasing its enduring relevance.

According to CoinMarketCap, Ethereum (ETH) is priced at $3,426.62 with a market cap of $413.58 billion. Over the past 30 days, ETH has seen a 17.39% decrease. The trading volume faced an 18.38% drop within 24 hours.

The Coincu research team highlights the potential for regulated token trading platforms to promote secure crypto markets. Historical trends suggest strong interest in frameworks that provide security classifications and exemption possibilities, assisting in aligning blockchain advancements with current regulations. Commissioner Peirce emphasized that innovative trading systems are considered for eligible tokenized securities within this framework.