SEC's "Minimum Dose" Regulation Aims to Boost Crypto Innovation

The U.S. Securities and Exchange Commission (SEC) has taken a significant step toward clarifying its stance on digital assets, with SEC Chair Paul Atkins asserting that "most crypto tokens are not securities." This declaration marks a shift in the agency’s approach, signaling a move away from enforcement-based actions toward a more structured regulatory framework. During a keynote speech at the OECD Roundtable in Paris, Atkins outlined the agency’s commitment to fostering innovation in the digital asset space, while maintaining investor protections.

Atkins introduced Project Crypto, a comprehensive initiative aimed at modernizing securities regulations to better accommodate blockchain-based financial markets. The plan seeks to streamline rules governing activities such as trading, lending, and staking of digital assets under a single regulatory umbrella. Central to this initiative is the promotion of “super-app” platforms, which can offer a range of services within one regulatory framework. These platforms will also be granted the flexibility to provide multiple custody solutions for users, reducing unnecessary regulatory burdens on entrepreneurs.

The SEC’s new strategy emphasizes the importance of a balanced regulatory approach that does not stifle innovation. According to Atkins, regulators should provide the “minimum effective dose of regulation needed to protect investors,” avoiding overregulation that could favor large incumbents at the expense of smaller firms. This approach aligns with the broader goal of making the U.S. a global leader in the crypto industry. The President’s Working Group on Digital Asset Markets has already contributed to this vision with a “bold blueprint” for regulatory modernization.

Atkins also praised the European Union’s Markets in Crypto-Assets (MiCA) framework, acknowledging it as a model for a comprehensive digital asset regime. While the U.S. continues to refine its own approach, the SEC is keen on fostering international cooperation to ensure harmonization and facilitate cross-border innovation. This collaborative stance is part of a broader strategy to strengthen U.S. capital markets and position the country as a hub for digital financial innovation.

The U.S. approach to crypto regulation is evolving in tandem with international developments. For instance, the European Banking Authority (EBA) recently finalized rules that require EU-based banks to hold significantly more capital against unbacked cryptocurrencies such as Bitcoin and Ether. In contrast, the U.S. has taken a more flexible stance, with the FDIC now allowing supervised banks to engage in crypto activities without prior approval. Meanwhile, Switzerland has updated its DLT laws to support crypto custody and stablecoin guarantees, reflecting a growing global trend toward regulatory clarity.

The SEC’s evolving stance has broader implications for the digital asset ecosystem. By offering clearer regulatory boundaries, the agency is encouraging innovation and investment within the U.S. market. This is particularly relevant in the context of recent efforts by Congress to draft comprehensive crypto legislation. Project Crypto is designed to complement these legislative efforts by modernizing the SEC’s rulebook and enabling on-chain capital markets. This transition from enforcement-based actions to a rules-driven framework is expected to create a more predictable and investor-friendly environment for digital asset innovation.