SEC Unveils Project Crypto to Modernize Digital Asset Regulation and Promote Self-Custody

The U.S. Securities and Exchange Commission (SEC) is advancing a transformative initiative dubbed “Project Crypto,” aimed at reshaping digital asset regulation and reinforcing America’s global leadership in the crypto and blockchain sector. SEC Chairman Paul Atkins emphasized that the project will uphold the right to self-custody digital assets, a move reflecting the agency’s evolving stance toward decentralized financial models [1].

Announced in late July, Project Crypto is the SEC’s response to President Donald Trump’s vision of making the U.S. the “crypto capital of the world.” The initiative is informed by the recent President’s Working Group (PWG) Report on Digital Asset Markets and seeks to modernize securities laws to accommodate the unique characteristics of blockchain-based assets. Atkins directed SEC staff to prioritize the development of a clear regulatory framework for crypto asset distributions, including the creation of bright-line tests to determine whether a digital asset qualifies as a security [1].

A central tenet of Project Crypto is the enhancement of custody options for digital assets. Atkins criticized previous regulatory approaches for restricting innovation and stressed the importance of self-custody as a “core American value.” He underscored the SEC’s support for individuals using self-custodial digital wallets to manage their assets and engage in onchain activities such as staking [1].

The project also aims to enable “super-apps,” a concept that would allow licensed securities intermediaries to offer a range of products—including non-security crypto assets—under a single regulatory license. This would eliminate the need for multiple approvals across state and federal jurisdictions, streamlining the process for financial services providers [1].

In addition, Project Crypto includes efforts to modernize outdated rules to facilitate the integration of onchain software systems into securities markets. This encompasses decentralized finance (DeFi) and other blockchain-based innovations, as the SEC seeks to create regulatory space for both intermediated and non-intermediated financial models [1].

The initiative is being coordinated through the SEC’s Crypto Task Force, led by Commissioner Hester Peirce. Atkins noted that the agency may leverage exemptions and regulatory flexibility during the rulemaking process to ensure innovation is not stifled by outdated frameworks. The project builds on recent legislative actions, including the passage of the GENIUS Act, which aims to remove regulatory barriers for digital assets [1].

This development marks a pivotal shift in the SEC’s approach, signaling greater alignment with the principles of decentralization and self-sovereign control. While the full details of Project Crypto remain under development, the emphasis on self-custody and regulatory clarity reflects a growing recognition of the role digital assets will play in the future of finance [1].

Source: [1] Drop Staked INIT Price Chart (DEINIT) (https://www.coingecko.com/en/coins/drop-staked-init)

[2] News Reports (https://www.justice-integrity.org/news-reports)

[3] STRENGTHENING AMERICAN LEADERSHIP IN DIGITAL ... (https://sergeytereshkin.ru/Digital-Assets-Report-EO14178.pdf)