SEC Prepares Major Cryptocurrency Classification Overhaul with New Token Taxonomy Framework

The U.S. Securities and Exchange Commission is charting a new course for crypto regulation under Chair Paul Atkins. Speaking at the Federal Reserve Bank of Philadelphia's Fintech Conference, Atkins revealed plans for a "token taxonomy" system that would determine which digital assets qualify as securities—a move signaling a potential softening from the agency's historically rigid stance.

The framework will employ the Howey Test while acknowledging that cryptocurrencies can evolve beyond their initial classifications. "Networks mature, code is shipped, control disperses," Atkins noted, suggesting some assets may transition out of securities designation as their ecosystems decentralize.

This structured approach contrasts with former Chair Gary Gensler's enforcement-heavy regime. Since taking office, Atkins has terminated multiple crypto investigations and launched Project Crypto to modernize SEC rules. The agency has concurrently hosted industry roundtables led by Commissioner Hester Peirce.

Despite the more accommodating tone, Atkins emphasized continued vigilance: "This is not a promise of lax enforcement. Fraud is fraud." The announcement reflects growing institutional recognition of crypto's maturation—a development that could reshape market dynamics for major assets.