SEC Chair Paul Atkins Drops Bombshell: Majority of Crypto Tokens Escape Security Classification Under New Rules
The crypto regulatory landscape just got a seismic shift. SEC heavyweight Paul Atkins dropped a game-changing revelation: most digital tokens won't meet the bar for securities under updated standards.
What this means for traders: Breathe easier—your altcoin portfolio just got regulatory breathing room. But institutional players? They're scrambling to adjust compliance playbooks overnight.
The fine print: This isn't a free pass. Projects still face scrutiny over decentralization thresholds and utility claims. Expect lawyers to feast on gray areas for years.
Wall Street's take: 'Another case of regulators playing catch-up with innovation,' muttered one exasperated hedge fund manager between sips of $28 cold brew.
Ethereum and XRP get a soft landing
Under these standards, the majority of crypto tokens trading today will not fall under the SEC’s jurisdiction.
In the instance that a crypto token does qualify as an investment contract by meeting that bar, it could again become a non-security after “the issuer either fulfills the representations or promises, fails to satisfy them, or they otherwise terminate.”
Paul Atkins stated that some types of crypto tokens should not be considered securities in and of themselves. Some of these are “network tokens” that are connected to a working, decentralized blockchain network. Most popular crypto tokens, such as Ethereum, Solana, and XRP, fall into this group.
Atkins also listed “digital collectibles” as a type of exempt token. These are crypto coins that either represent media rights or, more importantly, reference “internet memes, characters, current events, or trends.” Meme coins, which are both volatile and popular, seem to also be exempt from the SEC’s control.
Additionally, Atkins said that “digital tools,” which are crypto assets providing a practical function like a ticket, membership, or badge, are also not securities in his opinion.
During Gensler’s tenure, the SEC launched legal battles against high-profile firms, including Ripple Labs, Terraform Labs, Binance, Coinbase, and Kraken, actions that cost the industry billions in legal fees.
However, under the new guidelines, although his approach might be threatening to some tokens, SEC Chair Paul Atkins stated that crypto firms will now receive warning notices before any enforcement actions are taken. As reported by Cryptopolitan, he suggested companies should be given up to six months to address issues before enforcement is considered.
Atkins to plan for securities trading on non-SEC venues
Atkins stated that tokenized securities, which are copies of securities already regulated by the SEC that trade on the blockchain, WOULD still be subject to SEC regulation.
However, he reiterated his support for the growth of “super-apps,” which are platforms that facilitate trading of both securities and non-securities from a single location. Atkins said that he has asked his team to come up with suggestions that would let securities trade on sites that are not regulated by the SEC.
“While capital formation should continue to be overseen by the SEC, we should not hamstring innovation and investor choice by requiring the underlying assets to trade in one regulated environment versus another,” the chair said.
Still, Atkins praised the securities laws. According to him, “Congress crafted the securities laws to address specific problems—situations in which people part with their money based on promises that depend on the honesty and the competence of others. They were not designed as a universal charter to regulate every novel FORM of value, digital or otherwise.”
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