In a speech, U.S. Securities and Exchange Commission Chair Paul S. Atkins announced the launch of “Project Crypto”, described as a Commission-wide initiative to modernize securities rules to enable U.S. financial markets to move on-chain. He said he has directed SEC policy divisions to work with the Crypto Task Force led by Commissioner Hester Peirce to develop proposals aligned with the President’s Working Group on Digital Asset Markets recommendations, while noting the remarks reflected his personal views and not necessarily those of the SEC. The initiative sets out workstreams spanning crypto asset distributions, custody, trading venues and on-chain market infrastructure. Staff were instructed to draft “clear and simple” rules for crypto asset distributions, custody, and trading for public notice and comment, alongside guidance to help market participants determine when a crypto asset is a security or an investment contract and to propose purpose-fit disclosures, exemptions, and safe harbors for offerings and distribution methods including initial coin offerings, airdrops, and network rewards. On custody and intermediaries, the speech signalled a priority to modernize custody requirements for SEC registrants and consider adapting existing regimes, including potential exemptive or other relief. On market structure, Atkins called for a framework to allow non-security crypto assets and crypto asset securities to trade side-by-side on SEC-regulated platforms, asked staff to evaluate permitting certain non-security crypto assets subject to an investment contract to trade on venues not registered with the SEC, and directed work on guidance and proposals to support “super-app” models under streamlined licensing. Additional areas cited include creating workable regulatory space for decentralized finance and on-chain software systems, and exploring rule changes, including potential amendments to Regulation NMS, to accommodate on-chain trading of tokenized securities. While staff develop and finalize rule proposals for notice and comment, the speech indicated the SEC and its staff may consider interpretive, exemptive, and other authorities in the coming months to address “archaic” rules that may impede on-chain activity.

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