SEC's Clarity-First Approach Aims to Boost Crypto Innovation

The U.S. Securities and Exchange Commission (SEC) has marked a pivotal shift in its approach to digital assets, with Commissioner Hester Peirce—widely known as “Crypto Mom”—delivering a rare conciliatory message at the Coin Center Dinner on September 25, 2025. In her speech, Peirce acknowledged the agency’s historically stringent enforcement actions against the crypto industry and expressed regret for failing to persuade her colleagues to adopt a more accommodating stance earlier. “I am sorry that over most of my tenure at the SEC I failed to convince my colleagues in government to give you a chance,” she stated, signaling a departure from the agency’s previous adversarial tone. Peirce emphasized that the current regulatory clarity, driven by initiatives like the SEC’s Crypto Task Force and “Project Crypto,” could empower innovators to build tools enhancing safety, security, and prosperity in the digital asset sector Crypto Gets an Apology: SEC Finally Changes Its Tune^[1].

The shift reflects broader changes under SEC Chair Paul Atkins, who replaced Gary Gensler, whose administration prioritized enforcement actions and broadly classified most cryptocurrencies as securities. Under Atkins, the SEC has moved toward a more balanced framework, dropping several cases against crypto firms and introducing Project Crypto to modernize digital asset rules. This initiative aims to clarify regulatory boundaries for tokenized assets, custody standards, and trading practices while fostering innovation. “The SEC’s role is to safeguard markets that allow the spark of human creativity and skill to benefit society,” Atkins stated in a July 31 address, framing the agency’s new focus as one of “clarity over ambiguity” and “infrastructure design that reflects how crypto actually operates” Project Crypto: SEC Chair Promises Clarity, Ends Regulation by Enforcement^[4].

Key elements of this regulatory evolution include the SEC’s narrowing of securities classifications for digital assets. Atkins explicitly stated that “most crypto assets are not securities,” a stark contrast to the expansive interpretation under prior leadership. This reclassification could reduce compliance burdens for projects not aligned with traditional securities frameworks, encouraging U.S.-based innovation and reshoring crypto businesses that previously relocated overseas. Additionally, the SEC has introduced interpretive guidance on liquid staking arrangements, clarifying that certain protocol-native, non-custodial staking models may fall outside securities law under the Howey test .

Peirce’s speech also highlighted the SEC’s evolving stance on non-fungible tokens (NFTs). Previously, enforcement actions against NFT collections created regulatory uncertainty. In a humorous nod to this history, Peirce proposed a satirical NFT collection titled “The Dog’s Breakfast,” featuring caricatures of crypto figures, including herself as “CryptoMom” and a fictional lawyer called “Lost-in-Law.” This lighthearted approach underscored her broader message of collaboration, urging the industry to leverage the current regulatory clarity to develop “real value” for users Crypto Gets an Apology: SEC Finally Changes Its Tune^[1].

The implications of the SEC’s shift extend beyond policy rhetoric. By prioritizing “quick progress” in regulatory modernization, the agency aims to position the U.S. as a global leader in blockchain finance. Initiatives like Project Crypto include proposals for “super-apps” that integrate trading in both securities and non-securities under a single regulatory structure, reducing fragmentation and compliance costs. Furthermore, the SEC has approved in-kind redemptions for crypto exchange-traded products (ETPs), aligning them with traditional commodity ETPs and enhancing market efficiency. These steps signal a strategic move toward integrating on-chain systems into the broader financial ecosystem without stifling innovation .

While the SEC’s new approach has been welcomed by many in the crypto community, challenges remain. Critics, including consumer advocacy groups, warn that a laxer regulatory environment could increase the risk of fraud, echoing concerns raised during the 2022 FTX collapse. However, the agency has emphasized safeguards, such as custody modernization efforts and collaboration with the President’s Working Group on Financial Markets. As Congress continues to deliberate on broader crypto legislation, the SEC’s proactive framework may serve as a model for balancing investor protection with technological advancement .