SEC Unveils Project Crypto to Regulate ICOs Airdrops and DeFi

SEC Chair Paul Atkins announced a transformative initiative dubbed “Project Crypto” on Thursday, signaling a major shift in U.S. regulatory policy toward cryptocurrency activities. The initiative aims to modernize securities rules to bring crypto innovation back to U.S. markets, aligning with broader White House guidance released the previous day [1].

Under the new framework, previously restricted practices such as initial coin offerings (ICOs), airdrops, and network rewards could soon operate within a structured regulatory environment. Atkins emphasized that these reforms would eliminate the need for U.S. exclusions in many crypto projects due to legal uncertainties [1]. The SEC plans to introduce purpose-built exemptions, disclosures, and safe harbors to support these activities while ensuring compliance with securities laws.

The initiative also addresses broader issues in crypto regulation. For instance, it explores the potential for unlicensed platforms to trade non-security crypto assets that qualify as investment contracts—a significant departure from existing policy [1]. Additionally, brokers and dealers will be allowed to offer both crypto assets and traditional securities under a streamlined licensing structure, enabling activities such as staking and lending without multiple regulatory hurdles [1].

A key focus of the initiative is the DeFi sector, which has long been a contentious issue for regulators. Atkins stated that the SEC is working on a formal regulatory category for DeFi systems and pledged to protect “pure publishers of software code” while distinguishing between intermediated and disintermediated financial activities [1].

The timing of the announcement is notable. It follows a 168-page crypto policy report from the White House, which outlined broad recommendations to support the crypto industry. Many elements of this report are reflected in the SEC’s new initiatives [1].

Atkins stressed that the goal of “Project Crypto” is to foster innovation and ensure the U.S. remains a competitive hub for financial technology. He warned against allowing innovation to develop overseas while American markets remain stagnant [1].

The initiative marks a clear departure from the approach of former SEC Chair Gary Gensler, whose tenure was marked by stricter scrutiny of crypto projects. With the new framework, the SEC is positioning itself to support the industry while maintaining investor protections and regulatory clarity [1].

Sources:

[1] SEC Chair Paul Atkins Unveils Project Crypto, Greenlighting ICOs, Airdrops and More

https://decrypt.co/333001/sec-chair-paul-atkins-project-crypto-icos-airdrops