SEC’s ‘Project Crypto’ Outlines Four-Token Framework and New Paths for Trading

Overview

• Chair Paul S. Atkins set a Howey-based classification that keeps substance over form, grouping assets into digital commodities or network tokens, digital collectibles, digital tools, and tokenized securities.
• Under the model, only tokenized securities fall under securities regulation, while functional, decentralized network tokens, collectibles, and utility tools would not.
• Atkins said a token’s status can evolve, allowing assets that launch as securities to exit that status if projects achieve sufficient decentralization.
• He directed SEC staff to propose guidance and exemptions and to develop recommendations that could permit trading of certain tokenized securities through CFTC- and state-registered intermediaries.
• Acting CFTC Chair Caroline Pham signaled plans for listed spot crypto trading on registered exchanges in 2025, with the agencies coordinating to reduce overlap, and Atkins also flagged upcoming moves to rein in proxy advisors and scrutinize large index fund managers.