SEC Unveils 'Project Crypto' to Update Securities Rules for Blockchain-Based Markets

The U.S. Securities and Exchange Commission has outlined a sweeping effort to refresh securities regulation for markets that run on blockchain infrastructure. SEC Chairman Paul Atkins on July 31, 2025 introduced 'Project Crypto,' an agency-wide initiative aimed at reshaping the rulebook for an onchain financial system as tokenization spreads across traditional assets such as stocks and bonds. A central pillar of the plan is the SEC's view that most digital assets should not be treated as securities. If adopted in rulemaking and guidance, that stance would significantly reduce the registration, disclosure, and enforcement burdens that have defined the U.S. crypto landscape in recent years. Work on the initiative will be coordinated with the SEC's Crypto Task Force, led by Commissioner Hester Peirce. The Task Force is expected to develop proposals spanning custody requirements, trading frameworks, standards for digital-asset distribution, and approaches for integrating decentralized finance systems into the regulated financial system. The agenda also includes tailored disclosure regimes and exemptions for crypto offerings. On the interagency front, the SEC and the Commodity Futures Trading Commission are expected to sign a Memorandum of Understanding by March 2026 to establish joint frameworks for classifying tokens that do not fall under securities law. The broader overhaul is set to include updates to market-structure rules, including Regulation NMS. The SEC says it aims to have revised rules and new regulatory pathways in place by mid-2026 to support onchain trading systems alongside traditional exchanges. The initiative is aligned with President Trump's stated objective of positioning the U.S. as a global leader in cryptocurrency. It also reflects recommendations from the President's Working Group on Digital Assets, providing a degree of executive-branch support that earlier crypto-friendly efforts did not have. For investors and market participants, the SEC's position that most digital assets are not securities could remove a key source of legal uncertainty for token projects operating in the U.S. It may also open a clearer route for firms previously exposed to enforcement risk tied to alleged unregistered securities sales. Custody policy will be pivotal for tokenized securities: the SEC's framework for acceptable custody solutions will influence whether banks can hold these assets for clients, and by extension whether institutions such as pension funds and endowments can allocate capital to them. A coherent SEC-CFTC framework could also accelerate the development of regulated crypto-derivatives products that have operated in a legal gray area. With market-structure updates targeted for mid-2026, the coming year is expected to be a critical window for policy and industry planning.