SEC Launches Project Crypto Reclassifies Most Cryptos as Commodities

The U.S. Securities and Exchange Commission (SEC) has unveiled a transformative initiative dubbed “Project Crypto,” aimed at modernizing financial regulations to align with blockchain technology and digital assets. Announced by SEC Chair Paul Atkins at the America First Policy Institute, the initiative signals a marked shift toward a more favorable regulatory approach for the crypto industry. The move is expected to streamline compliance for market participants, clarify the legal status of crypto assets, and promote innovation in blockchain-based finance [1].

At the core of Project Crypto is the reclassification of most cryptocurrencies as commodities rather than securities. This distinction could significantly reduce regulatory friction for crypto projects, especially in areas such as licensing and initial coin offerings. The initiative also proposes streamlining brokerage licensing to allow firms to operate multiple asset classes under one regulatory umbrella, reducing barriers to entry for crypto integration [2]. This approach aligns with recent policy shifts, such as the SEC’s approval of in-kind creations and redemptions for crypto ETFs and its clarification that proof-of-stake staking income is not a securities transaction [5].

The project is designed to respond to the recommendations of the President’s Working Group on Digital Assets, which emphasized the need for the U.S. to assume a leadership role in the global crypto economy. Atkins highlighted that the initiative is not only about regulatory efficiency but also about fostering innovation and maintaining America’s competitive edge. He argued that outdated rules governing self-custody and other legacy financial systems are ill-suited for the blockchain era and must be re-evaluated [6].

One of the most significant implications of Project Crypto is its potential to reshape the landscape for institutional investors and blockchain-based financial platforms. By reducing regulatory ambiguities, the initiative is expected to encourage greater institutional participation and liquidity in crypto markets. This could lead to the development of more sophisticated financial products and services, including decentralized finance (DeFi) solutions and digital asset trading platforms [3].

The SEC is also coordinating closely with the Commodity Futures Trading Commission (CFTC), with the CFTC taking the lead in regulating spot markets for digital assets. This interagency collaboration underscores the importance of a cohesive regulatory approach to ensure consistent enforcement and market stability [7]. Such coordination could help address cross-jurisdictional challenges and provide a clearer, more unified regulatory framework for market participants.

Analysts suggest that the initiative could lead to a broader adoption of blockchain technology in mainstream financial systems, paving the way for more integrated and efficient capital markets. While the long-term impact remains to be seen, the initial signals from the SEC indicate a regulatory environment that is more open to innovation and less adversarial toward crypto projects [4]. This shift is likely to encourage investment flows into blockchain-based technologies and accelerate the development of the digital asset ecosystem.

The announcement of Project Crypto marks a pivotal moment in the evolution of U.S. financial regulation and positions the country to play a leading role in the global crypto market. As the initiative unfolds, its effectiveness will depend on the SEC’s ability to implement clear and enforceable rules that support both innovation and investor protection [8].

Source:

[1] https://www.cnbc.com/2025/07/31/sec-debuts-project-crypto-to-bring-us-financial-markets-on-chain.html

[2] https://www.ledgerinsights.com/sec-chair-launches-project-crypto-says-most-cryptos-are-not-securities/

[3] https://www.coindesk.com/policy/2025/07/31/u-s-sec-chairman-atkins-says-agency-pursuing-project-crypto-to-elevate-industry

[4] https://bitcoinmagazine.com/news/sec-launches-project-crypto-to-make-us-the-global-hub-for-bitcoin-and-digital-assets

[5] https://coinpedia.org/news/sec-chair-paul-atkins-unveils-project-crypto-to-modernize-capital-markets/

[6] https://qz.com/sec-deregulate-cryptocurrencies-project-crypto

[7] https://cointelegraph.com/news/sec-chair-atkins-announces-project-crypto

[8] https://www.pymnts.com/cryptocurrency/2025/sec-launches-project-crypto-modernize-securities-rules-regulations/