The U.S. Securities and Exchange Commission (SEC) has announced a series of major changes to its approach on crypto regulation, marking a significant departure from previous policies. Under the leadership of SEC Chair Paul Atkins, the new initiatives—unveiled as “Project Crypto”—seek to modernize securities laws, foster innovation, and provide greater clarity for participants in the digital asset markets.

One of the central features of these proposals is the recognition that most crypto assets do not qualify as securities and therefore should not be subject to the traditional securities regulations. To address longstanding industry confusion, the SEC is developing clear guidelines to help market participants determine whether a crypto asset is a security or falls under a different category. When securities laws do apply, new, tailored disclosure rules and exemptions—specifically for things like initial coin offerings, airdrops, and network rewards—will be considered. This change aims to promote capital formation within the U.S. and reduce the incentive for crypto businesses to move offshore.

Additionally, the SEC has committed to drafting streamlined rules for the issuance, custody, and trading of crypto assets. There is a strong focus on adapting existing requirements for intermediaries, such as broker-dealers and custodians, so they better fit the unique nature of digital assets. The SEC also intends to introduce new safe harbors and exemptions to support innovation while maintaining market integrity.

Another notable adjustment is the support for user self-custody and broader participation in on-chain activities. While some crypto users prefer to self-custody their assets, the SEC acknowledges that many investors still rely on intermediaries, and thus regulations are being updated accordingly.

These proposed regulatory updates reflect a broader shift towards supporting market efficiency and innovation, while maintaining investor protection and discouraging bad actors. The changes are being prioritized for formal notice-and-comment rulemaking, ensuring all industry stakeholders have an opportunity to shape the evolving framework. With these reforms, the SEC signals its commitment to making the U.S. a global leader in digital finance.