The Securities and Exchange Commission has launched “Project Crypto,” a sweeping initiative aimed at modernizing U.S. securities regulation to integrate blockchain technology into American financial markets and establish the United States as the “crypto capital of the world.”
Announced by SEC Chairman Paul Atkins on July 31, 2025, at the America First Policy Institute in Washington, D.C., the project represents a fundamental shift from the previous “regulation-by-enforcement” approach toward a flexible regulatory framework designed to foster innovation while protecting investors.
A New Era for Digital Finance Regulation
Project Crypto marks a watershed moment for the U.S. cryptocurrency industry, signaling the end of an era where blockchain companies faced regulatory uncertainty and enforcement actions. Atkins framed the initiative as essential for maintaining American leadership in the digital finance revolution, warning that without regulatory modernization, U.S. markets risk falling behind international innovations.
“The President’s Working Group on Digital Asset Markets Report provides the blueprint to make America first in blockchain and crypto technology,” Atkins stated, emphasizing the alignment between Project Crypto and President Trump’s vision for U.S. dominance in digital finance.
The initiative builds on recent legislative progress, including the passage of the GENIUS Act for stablecoin regulation and ongoing efforts to pass comprehensive market structure legislation. Together, these developments create a regulatory environment conducive to blockchain innovation while maintaining necessary investor protections.
Core Components of Project Crypto
Project Crypto encompasses several key priorities designed to transform how digital assets are regulated and integrated into U.S. financial markets:
Regulatory Framework Modernization: The SEC will develop clear rules for the distribution, custody, and trading of crypto assets, moving away from case-by-case enforcement toward predictable, principles-based regulation. These rules will be subject to public notice and comment, ensuring transparency and stakeholder input.
Innovation Exemption: Atkins proposed a new “innovation exemption” that would allow novel blockchain business models and technologies to enter the market quickly, even if they don’t fit neatly within existing SEC rules. This exemption would be principles-based, requiring compliance with core investor protection objectives without imposing rigid requirements.
Crypto Asset Classification Guidelines: SEC staff will develop clear guidelines for determining whether a crypto asset constitutes a security, including tailored disclosures, exemptions, and safe harbor mechanisms for crypto asset securities. This addresses one of the most significant sources of regulatory uncertainty for blockchain companies.
Super-App Framework: The initiative will enable “super-apps”—platforms that allow securities intermediaries to offer trading in crypto asset securities, non-security crypto assets, crypto services like staking, and traditional securities under a single regulatory framework.
Bringing Crypto Home: Eliminating Offshore Reliance
A central goal of Project Crypto is to encourage crypto asset distributions to return to the United States, eliminating the current reliance on offshore structures that many blockchain companies have adopted to navigate regulatory uncertainty.
Atkins emphasized that most crypto assets should not be classified as securities and that being designated as a security should not deter development. He instructed SEC staff to create a regulatory environment that encourages innovation while ensuring American investors can participate in new digital asset offerings.
The framework will support crypto asset securities that offer features like voting rights and distributions, rejecting the need for premature decentralization or offshore structuring. This approach aims to provide legal clarity for innovators while maintaining appropriate investor protections.
Custody and Trading Modernization
Project Crypto addresses critical infrastructure issues by modernizing custody rules and expanding trading venue options for digital assets:
Self-Custody Support: Atkins reaffirmed strong support for self-custody, calling it a “core American value,” while recognizing that many investors will continue to rely on SEC-registered intermediaries. The SEC will adapt existing custody rules to accommodate crypto assets through both exemptive relief and potential rule changes.
Expanded Trading Options: Market participants will have “maximum choice” in how they custody and trade crypto assets. The initiative will allow side-by-side trading of crypto asset securities and non-security crypto assets on SEC-regulated platforms, while also exploring options for non-security crypto assets to trade on state-licensed and CFTC-regulated platforms.
Regulatory Efficiency: The SEC will work to streamline licensing structures and avoid duplicative regulatory burdens across different agencies, emphasizing the importance of regulatory efficiency and competition in fostering innovation.
Integrating On-Chain Systems
Perhaps the most ambitious aspect of Project Crypto is its focus on integrating “on-chain” software systems into U.S. securities markets. Atkins directed SEC staff to update outdated rules to support both fully decentralized systems and those with identifiable operators.
“Federal securities laws have traditionally assumed the presence of intermediaries, but regulation should not impose intermediaries where markets can function without them,” Atkins explained, highlighting the need to accommodate disintermediated financial activity.
The initiative will protect pure publishers of software code and establish practical rules for intermediaries operating on-chain. Atkins noted that implementing this vision may require rule changes, including potential amendments to Regulation NMS to accommodate tokenized securities trading.
Commercial Viability as the Guiding Principle
Throughout his announcement, Atkins emphasized that Project Crypto would prioritize commercial viability and practical implementation. The innovation exemption would include conditions such as periodic reporting, use of whitelisting or “verified pool” functionality, and limitations on tokenized securities that don’t comply with established standards.
The SEC will evaluate new business models with an eye toward market readiness and practical implementation, avoiding overly rigid requirements that could stifle innovation. This approach reflects a recognition that the rapidly evolving blockchain industry requires adaptive regulation.
Industry Reaction and Implementation Timeline
The cryptocurrency industry has responded positively to Project Crypto, viewing it as a significant step toward regulatory clarity and legitimacy. Industry leaders note that the initiative could catalyze a wave of innovation and investment in U.S. blockchain companies.
Implementation will occur through multiple channels:
Rulemaking Process: The SEC will draft formal rules for crypto asset distribution, custody, and trading, following the standard notice-and-comment rulemaking process. This will provide opportunities for industry input and public participation.
Crypto Task Force Collaboration: The SEC will work closely with its Crypto Task Force to develop rule proposals aligned with the President’s Working Group on Digital Asset Markets Report recommendations.
Exemptive Relief: In some cases, the SEC may use interpretative, exemptive, and other authorities to provide immediate relief from outdated rules while longer-term rulemaking processes are underway.
Global Competitiveness and Future Outlook
Project Crypto represents a strategic effort to ensure U.S. leadership in the global blockchain and cryptocurrency markets. As other countries develop their own regulatory frameworks for digital assets, the initiative positions the United States to compete effectively for blockchain innovation and investment.
The success of Project Crypto will depend on several factors, including the speed and effectiveness of implementation, the ability to balance innovation with investor protection, and the cooperation of other regulatory agencies and Congress.
However, the initiative signals a fundamental shift in how U.S. regulators approach blockchain technology, potentially ushering in a new era of American leadership in digital finance. As Atkins noted, “This is a defining opportunity for American leadership in digital finance.”
For blockchain companies, investors, and market participants, Project Crypto offers the prospect of regulatory clarity that has been lacking for years, potentially unlocking new opportunities for innovation and growth in the U.S. digital asset market.
This article reflects information available as of August 12, 2025. Regulatory developments and implementation details may have evolved since publication.
