SEC Under Paul Atkins May Clarify Crypto Rules Through Project Crypto, Potentially Revising Token Classification and Custody

  • SEC will publish clearer rules on token classification, custody, and trading.

  • Project Crypto aims to modernize regulation and reduce compliance friction for market participants.

  • Chair Paul Atkins emphasizes enforcement against fraud while enabling legal certainty for crypto firms.

Project Crypto SEC crypto regulation update: key rule changes on token classification, custody, and DeFi oversight — read implications and next steps for firms.

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What is Project Crypto?

Project Crypto is the SEC’s rulemaking initiative to clarify how securities laws apply to cryptocurrency. The program targets token classification, updated custody standards, trading rules, and cross-agency coordination. It replaces ad hoc enforcement with formal rules designed to reduce uncertainty for market participants.

How will the SEC change crypto rules under Chair Paul Atkins?

Chair Paul Atkins has signaled a shift from the prior era of “regulation by enforcement” under Gary Gensler to transparent rulemaking. The SEC will prioritize written rules on token status, custody requirements for digital assets, trading oversight, and guidance for decentralized finance (DeFi).

The agency also plans cross-agency collaboration with banking and commodities regulators and will publish timelines for rule proposals. Atkins reiterated the SEC’s continued strict stance on fraud and market manipulation.

Why does token classification matter?

Token classification determines which legal regime applies. If a token is a security, issuers face registration, disclosure, and custody obligations. Clear definitions reduce legal risk for exchanges, custodians, and developers and can unlock broader institutional participation.

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Firms should conduct immediate compliance reviews of token listings, custody practices, and trading controls. Implement transparent disclosure processes and update custody segregation and insurance policies. Maintain audit trails and strengthen anti-fraud controls.

Project Crypto is expected to focus on: token classification, custody rule updates, DeFi engagement, cross-agency coordination, and streamlining compliance for private market asset digitization. The SEC will also seek to modernize rule language to account for blockchain-native structures.


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Source: https://en.coinotag.com/sec-under-paul-atkins-may-clarify-crypto-rules-through-project-crypto-potentially-revising-token-classification-and-custody/