President Trump wants America to become the “crypto capital of the world” and the US’ Securities and Exchange Commission (SEC) has a plan to achieve just that: Project Crypto. Announcing the initiative in a recent speech, Paul Atkins, the commission’s chairman, made a commitment to “reshore the crypto businesses” that had previously fled America, because they were “crippled by the previous administration’s regulation-by-enforcement crusade”.
To entice businesses to return, Project Crypto aims to “modernise the securities rules and regulations to enable America’s financial markets to move on-chain”. Atkins revealed that he has “directed the commission staff to draft clear and simple rules of the road for crypto asset distributions, custody, and trading for public notice and comment”. Before these new regulations get finalised and implemented, the commission intends to “consider using interpretative, exemptive, and other authorities to make sure that archaic rules and regulations do not smother innovation and entrepreneurship”.
A turnaround
A key priority will be to establish a regulatory framework for the distribution of crypto assets in America. Criticising the previous administration’s stance, Atkins says, “Despite what the SEC has said in the past, most crypto assets are not securities.” His team will therefore “work to develop clear guidelines that market participants can use to determine whether a crypto asset is a security or subject to an investment contract”, with the goal to “help market participants to slot crypto assets into categories, such as digital collectibles, digital commodities, or stablecoins, and assess the economic realities of a transaction”.
Atkins cautions that being deemd a security should not be a scarlet letter. For crypto asset transactions subject to securities laws, the commission will work on proposals for “purpose-fit disclosures, exemptions, and safe harbours, including for so-called ‘initial coin offerings’, ‘airdrops’, and network rewards”.
More ambitions
Other priorities mentioned in Atkins’ speech include ensuring choice in the custody and trading venues of crypto assets; enabling the trading of a range of products and services, such as non-security crypto assets and crypto asset securities, under a single licence; and updating regulations to accommodate not just on-chain software systems that come with intermediaries, but also the truly decentralised, non-intermediated platforms.
