SEC Chairman Atkins Outlines Priorities Under “Project Crypto”

On November 12, 2025, SEC Chairman Paul Atkins delivered remarks outlining the SEC’s ongoing work under “Project Crypto,” a regulatory initiative launched earlier this year to encourage crypto asset innovation and clarify how existing securities laws apply to such assets. Atkins’ remarks previewed the next phase of the initiative, outlining the SEC’s plans to provide greater clarity on whether crypto assets are securities through the development of a formal token taxonomy, an application of the Howey[1] test focused on whether an investment contract remains in effect, and a potential “Regulation Crypto” proposal addressing tailored disclosure, exemption, and safe-harbor provisions for crypto asset distributions.

Below are the highlights of Atkins’ remarks.

Token Taxonomy

The Chairman reiterated his view that “most crypto tokens trading today are not themselves securities” because they are based on expired investment contracts. In doing so, he rejected the view that a token that was at one point subject to an investment contract remains a security throughout its transaction lifecycle. Accordingly, Atkins emphasized the need for a clear token taxonomy to assist market participants navigating the current crypto assets regulatory landscape, which he described as a “securities-law minefield.” Based on hundreds of meetings with market participants, Atkins outlined categories of crypto assets and whether he believes they are subject to the federal securities laws.

• Digital commodities or network tokens. According to Atkins, “digital commodities” or “network tokens” are not securities because their value is tied to a decentralized network, rather than the essential managerial efforts of others, a key component of the Howey test.[2]

• Digital collectibles. Similarly, Atkins believes “digital collectibles” (e.g., artwork, in-game items, or digital representations or references to internet memes) are not securities, stating that purchasers of digital collectibles are not expecting profits from the essential managerial efforts of others.

• Digital tools. Atkins also believes that “digital tools” (i.e., crypto assets that perform a practical function, such as a membership, ticket, credential, title instrument, or identity badge) are not securities, for the same reasons discussed above.

• Tokenized securities. Atkins affirmed that “tokenized securities” are and will continue to be securities because these crypto assets represent the ownership of a financial instrument enumerated in the definition of “security.”[3]

Atkins underscored that classification of crypto assets depends on substance over form, and that it is the economic reality of a transaction that matters, not its label. Atkins’ remarks align with previously released statements by the SEC’s Division of Corporation Finance clarifying how federal securities laws apply to a range of crypto activities.[4]

Application of the Howey Test to Crypto Assets

Atkins reaffirmed that the Howey test remains the legal standard for determining whether a transaction involving crypto assets constitutes an “investment contract.” The Howey test is a four-part standard used to determine whether the way an asset is offered and sold constitutes an investment contract and is therefore subject to compliance with federal securities laws. Under the Howey test, the SEC and courts analyze whether there is an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the essential managerial efforts of others. According to Atkins, this reasonable expectation of profits depends on the issuer’s “explicit and unambiguous” representations or promises to engage in essential managerial efforts.

Atkins noted that an issuer’s representations may not last forever, especially as the issuer’s role diminishes or even disappears over time. In his view, a crypto token might initially involve an investment contract but shed this status once the issuer’s representations or promises to engage in essential managerial efforts cease. At this point, he explained, purchasers are no longer relying on the issuer’s essential managerial efforts and thus the crypto token is no longer a security—even though it may continue to trade.

Atkins cautioned that securities and commodities anti-fraud statutes still apply to misstatements and omissions made in connection with the sale of an investment contract, even where the underlying asset itself is not a security.

Regulation Crypto

Atkins expressed his hope that in the coming months, the SEC (working in coordination with the CFTC, banking regulators, and Congress) will consider possible exemptions and tailored frameworks applicable to crypto asset offerings that are part of or subject to an investment contract. He also voiced support for legislative efforts to codify a crypto market structure and reiterated the need for continued feedback and collaboration from market participants and investors.

Atkins cautioned that while the SEC is considering exemptions that facilitate capital formation and accommodate innovation, enforcement actions would continue to focus on fraud and other illicit conduct, and that violators will be pursued to the full extent of the law.

Looking Ahead

Atkins’ remarks are yet another example of the SEC’s ongoing efforts to address the regulatory framework surrounding crypto assets. Further guidance and rulemaking are on the horizon, and market participants should continue to monitor developments from the SEC.

If you have any questions concerning this alert, please contact the authors.

[1] See SEC v. W. J. Howey Co., 328 U.S. 293, 298–299 (1946).

[2] See the proposed Digital Asset Market Clarity Act (the “CLARITY Act”). The CLARITY Act seeks to establish a regulatory framework for digital assets, reflecting a growing bipartisan effort in Congress for oversight of the digital asset industry. On Nov. 9, 2025, the Senate Committee on Agriculture, Nutrition and Forestry, led by Chairman John Boozman (R-AR) and Senator Cory Booker (D-NJ), released a bipartisan discussion draft amending a version of the CLARITY Act passed by the U.S. House of Representatives this past July 2025.

[3] See Client Alert: U.S. SEC Considers Conditional Exemption for Tokenized Securities.

[4] See Client Alert: SEC’s Corporation Finance Staff says the offer and sale of “Meme Coins” does not fall under the Securities Act – the Meming of it all; see Client Alert: U.S. SEC Issues Statement on Stablecoins; see Client Alert: SEC Concludes Certain Protocol Staking Activities Are Not Securities Offerings.