The speech outlines the SEC’s commitment to regulatory clarity, innovation and market competition, and shows significant changes in agency approaches to digital asset oversight, the day after the president’s working group on digital asset markets published a report entitled “Strengthening American Leadership in Digital Financial Technology” (“PWG Report”). Atkins called the PWG Report “a blueprint for making America the first with blockchain and cryptographic technology,” and said Project Crypto was designed to implement recommendations in the PWG Report and support President Trump’s vision of making the US “global crypto capital.”
Atkins declared that most crypto assets are not securities, taking a clear break from the vast jurisdiction stance of the previous administration, signaling the narrower application of the securities law to digital assets. Atkins also pointed out that he rejected the previous administration’s “regulated by” approach and directed SEC staff to:
Headed by Hester Peirce, the PWG recommendations will be implemented promptly to use interpretations, exemptions and other authorities to ensure that they do not hinder American innovation and entrepreneurs in the US by using interpretations, exemptions and other authorities.
In his speech, Atkins highlighted five important initiatives in Project Crypto. This is summarized below.
Overview of Project Crypto’s key initiatives
1. Establishing a clear regulatory framework for the distribution of crypto assets in the US
In line with the PWG report, Project Crypto will drive a fee-wide effort to establish a regulatory framework for the distribution of crypto assets in the United States. The SEC will develop and publish clear guidelines to help market participants determine whether crypto assets are security, commodities, stubcoins, or other types of digital assets. The SEC works to ensure that being classified as security is not a deterrent to innovation, but a flexible framework for product design and investor participation. Atkins highlighted the need for “bright line rules” and “fit-of-purpose disclosure, exemptions, and safe ports” for security tokens that include initial coin provision (ICO), airdrops and network rewards. These can take the form of new exemptions or time-limited safe harbors for tokens before they work, reducing compliance for early stage projects. The initiative aims to re-fire crypto companies that previously left the US due to regulatory uncertainty and an enforcement-led approach.
2. Ensuring freedom of choice between custodians and trading venues
The SEC ensures that market participants make the most of their choice in cryptocurrency and trade assets through the possibility of exemptions or other relief in addition to changes to the rules themselves. Atkins reaffirms the committee’s commitment to protecting Americans’ rights to self-reliant digital assets, calling it “American values.” The SEC implements the PWG report recommendations to modernize the custody requirements of registered intermediaries and promotes the competitive market for custody service providers.
3. Accepting market competition and promoting “super apps”
Project Crypto envisions a regulatory environment in which trading venues and intermediaries can provide a wide range of digital asset services and products, including both securities and non-security products, within a single efficient licensing structure (called “super apps”). Following the PWG recommendations, the SEC pursues a framework that enables “super apps” to work, enabling parallel trading of security and non-security digital assets, reducing overlapping regulatory burdens. As proposed by the PWG, agents coordinate with the Commodity Futures Trading Commission (CFTC) and other regulators to maximize market competition and liquidity, reducing the need for overlapping regulations and promoting inter-agency efficiency.
4. On-Chain Innovation and Decentralized Finance (DEFI) Support
The SEC creates regulatory space for both intermediate and intermediate (decentralized) on-chain software systems, such as defi protocols and automated market makers. The SEC distinguishes between pure software publishers and intermediaries, and develops reasonable and viable rules for systems operating in chains. The Commission will consider amending existing rules, such as regulatory NMS, to accommodate transactions in a chain of tokenized securities. SEC staff have been instructed to consider bailouts to promote tokenization of traditional assets such as stocks and debt certificates, encouraging such offerings on land.
5. Innovation exemption and commercial viability
The SEC is investigating the creation of “innovation exemptions” to enable subscribers and non-registers to quickly bring new business models and technologies to the market, subject to principled terms. The focus is commercial viability, ensuring that regulatory requirements do not curb innovation or drive business offshore.
Impact on market participants
Project Crypto represents a significant shift in the SEC’s approach to digital asset regulation, with an emphasis on regulatory clarity, innovation and market competition. Market participants, including publishers, trading platforms, custodians and investors, should closely monitor future SEC proposals and consider their involvement in the public comment process. The SEC is expected to outline proposed rulemaking in a short term and may use tentatively interpreted or exempt relief. This creates a window of proactive engagement to shape the rules. Market participants should also consider directly involved with the Cryptocurrency Task Force.
Furthermore, initiatives outlined in the speech can create new opportunities for capital formation, product development and markets, while also pose important questions about compliance, risk management and operational readiness in the rapidly evolving regulatory landscape. For example, custody arrangements, Defi participation, and cross-border operating structures may need to be reassessed to align with new frameworks and leverage potential reabuse incentives. Technical registration cases could be backwards, but fraud, cybersecurity violations and market manipulation enforcement remain positive priorities. Therefore, market participants should also consider reviews of business structures, products and compliance programs to best position themselves in this new regulatory framework.
Conclusion
Chair Atkins’s project cipher speech marks the beginning of a new era of US digital asset regulation. By embracing the on-chain market, supporting innovation and providing clear rules for roads, the SEC aims to solidify America’s leadership in the global digital finance revolution. Market participants must be prepared for a more dynamic, competitive, innovative-friendly regulatory environment and be prepared to seize the opportunity it presents.
Contact members of the FinTech and Digital Assets teams with questions regarding their speech or their potential impact on their operations.
1 For further analysis of the PWG report, see the previous article, “Major Takeout from the White House Digital Assets Report, Strategic Framework for US Digital Asset Policy”: https://www.aoshearman.com/en/insights/ao-shearman-on-fintech-and-digitation-assets/key-takeaways-from-the-white-house-sitic
2 The SEC launched a Cryptody Task Force led by Commissioner Hester Perth on January 21, 2025, clarifying the scope of regulatory jurisdiction over a variety of digital asset products and services (see previous articles on Memecoin, Stubcoin, and Staking for more information: https://www.aoshearman.com/en/insights/ao-shearman-on-fintech-and-digital-assets/-sec-stance-meme-coins-are-not-securities. https://www.aoshearman.com/en/insights/ao-shearman-on-fintech-and-digital-assets/sec-staff-takes-a-security-status-of-asd-backed-stablecoins. https://www.aoshearman.com/en/insights/ao-shearman-on-fintech-and-digital-assets/sec-staff-takes-a-position-securities-tatus-of-protocol-staking-activity.)
3 On August 4, 2025, Acting CFTC Chairman Caroline Fam announced the launch of an initiative to trade Spot Crypto Asset contracts listed on the CFTC Registered Futures Exchange. In the announcement, Pham said, “CFTC is fully sprinted by working with SEC’s project Crypto to enable immediate trading of digital assets at the federal level.” This initiative is the first initiative of CFTC’s “Crypto Sprint” announced by PHAM on August 1, 2025, and will begin implementing recommendations for the PWG report.
4 On August 1, 2025, the SEC announced that the Cryptody Task Force would hold a series of roundtables nationwide to provide opportunities for additional stakeholders leading the Cryptody Task Force to meet with Commissioner Hester Perth. The task force is particularly interested in contacting representatives of cryptographic projects with fewer than 10 employees and less than two years.
