US Securities and Exchange Commission Chair Paul Atkins spoke on how the regulator would handle enforcement of digital asset fraud under its “Project Crypto” initiative and legislation pending in Congress.
In prepared remarks for a speech on Wednesday at the Federal Reserve Bank of Philadelphia, Atkins provided details about the agency’s plans to modernize its approach to regulating digital assets.
According to Atkins, the agency plans to consider “establishing a token taxonomy” in the coming months, “anchored” in the Howey test — the standard by which the SEC evaluates securities — to recognize that “investment contracts can come to an end.”
“Commissioner [Hester] Peirce has rightly observed that while a project’s token launch might initially involve an investment contract, those promises may not remain forever,” Atkins said, adding that “once the investment contract can be understood to have run its course, the token may continue to trade, but those trades are no longer “securities transactions.”
Atkins said that while he led the agency, he would consider digital commodities, digital collectibles, digital tools, and network tokens not securities under its purview. “Tokenized securities,” in contrast, would continue to be regulated by the SEC.
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“In the coming months, as contemplated in legislation currently before Congress, I hope that the Commission will also consider a package of exemptions to create a tailored offering regime for crypto assets that are part of or subject to an investment contract,” said Atkins.
The SEC chair also commented on the agency’s approach to the market structure bill being weighed in the US Senate:
“[This] is not a promise of lax enforcement at the SEC. Fraud is fraud. While the SEC protects investors from securities fraud, the federal government has a host of other regulatory bodies well equipped to police and protect against illicit conduct.”
Market structure bill moving forward despite government shutdown
Although the US government remains shut down as of Wednesday afternoon, lawmakers in the House of Representatives are expected to vote on a funding bill this evening, which has already been passed by the Senate. The bill is intended to fund the government through the end of January, after it was shut down for more than 40 days.
The Senate remained in session during the shutdown, with some senators reportedly negotiating terms for the market structure bill. On Monday, Republican leaders with the Senate Agriculture Committee released a discussion draft of its version of the bill, signaling progress.
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