Bitcoin News Today: SEC Launches Project Crypto to Modernize Crypto Regulation and Boost Innovation

The U.S. Securities and Exchange Commission (SEC) has launched "Project Crypto," a comprehensive initiative aimed at modernizing the regulatory framework for crypto assets. Announced by SEC Chair Paul Atkins in a speech at the America First Policy Institute, the initiative seeks to establish the U.S. as the “crypto capital of the world” and implement recommendations from the President’s Working Group on Digital Asset Markets [1]. Atkins emphasized the agency’s commitment to fostering innovation while ensuring investor protections, stating that “most crypto assets are not securities,” a clarification he said is essential for reducing regulatory uncertainty in the market [2].

Project Crypto will focus on several key areas, including creating clear guidelines for determining whether crypto assets qualify as securities, developing purpose-fit disclosures and safe harbors for token distributions, modernizing custody requirements, and enabling the development of “super-apps” that can offer multiple crypto services under a single license [3]. These efforts are intended to streamline the regulatory environment, making it easier for market participants to innovate within a structured and transparent system [4].

A key component of the initiative is the SEC’s recent approval of in-kind creation and redemption mechanisms for crypto asset exchange-traded products (ETPs). This change allows investors and authorized participants to exchange actual crypto assets—such as Bitcoin (BTC) and Ether (ETH)—for ETP shares, rather than using cash. SEC officials said this shift is expected to reduce transaction costs and improve overall market efficiency [5]. The development has been widely welcomed by the industry and is seen as a practical enhancement to the infrastructure supporting crypto ETPs [6].

Atkins also highlighted the agency’s ongoing work to refine its interpretation of the “Howey test,” a legal standard used to determine whether an investment constitutes a security. The SEC’s goal is to reduce confusion and provide clearer guidance to innovators who may have previously treated all crypto assets as securities out of precaution [7]. This effort aligns with broader government initiatives to establish a cohesive national strategy for crypto policy, although specific actions, such as the creation of a strategic Bitcoin reserve, remain undefined [8].

Market participants have responded positively to the SEC’s evolving approach. Spot Bitcoin and Ether ETPs have seen sustained inflows, with Ether ETPs recording $5.4 billion in new capital over 18 consecutive days. This trend highlights the increasing demand for crypto-based investment vehicles and suggests that clearer regulatory guidelines may further drive adoption. The SEC has also approved a range of related products, including ETFs holding mixed Bitcoin and Ether and options on spot Bitcoin ETFs, signaling a broader push to expand the availability of crypto investment tools [9].

While the initiative is seen as a step in the right direction, some industry observers remain cautious. The in-kind redemption mechanism, while a technical improvement, does not fully address concerns related to market integrity and the potential for manipulation in crypto ETPs [10]. Nevertheless, the SEC’s recent actions indicate a commitment to balancing innovation with investor protection in the digital finance sector [11].

Source:

[1] https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125

[2] https://www.investing.com/news/cryptocurrency-news/sec-chairman-unveils-project-crypto-to-make-us-a-global-leader-93CH-4164022

[4] https://bravenewcoin.com/insights/white-house-releases-crypto-strategy-but-no-new-details-on-strategic-bitcoin-reserve

[6] https://cryptoadventure.com/sec-finally-approves-in-kind-creations-and-redemptions-for-spot-crypto-etfs/

[10] https://www.coindesk.com/policy/2025/07/30/u-s-bitcoin-reserve-plans-still-elusive-as-white-house-touts-crypto-report