SEC Chair Paul Atkins is spearheading a drive to "reshore crypto" businesses, encouraging them to return to the United States. This initiative, dubbed "Project Crypto," aims to modernize securities regulations and foster innovation within the digital asset market, with the goal of positioning the U.S. as the world's "crypto capital".
Atkins unveiled "Project Crypto" at the America First Policy Institute in Washington, D.C.. He emphasized the importance of integrating blockchain technology into U.S. financial markets, enabling decentralized finance (DeFi), and introducing an "innovation exemption" to accelerate the deployment of new technologies. This marks a significant shift towards a more adaptable regulatory stance.
A key aspect of "Project Crypto" is the SEC's acknowledgment that most cryptocurrency tokens are not securities. This deviates from the previous "regulation-by-enforcement" approach, which Atkins believes stifled innovation and drove businesses overseas. Atkins has directed SEC staff to develop clear guidelines for determining whether a crypto asset is a security. The SEC also intends to propose tailored disclosures, exemptions, and safe harbor mechanisms for crypto asset securities, including initial coin offerings (ICOs), airdrops, and network rewards.
To facilitate the return of crypto businesses, Atkins has instructed the SEC staff to develop a comprehensive regulatory framework that provides legal clarity for innovators and eliminates reliance on offshore structures. He specifically called out "Operation Chokepoint 2.0," an alleged coordinated effort by U.S. regulators and banks to restrict crypto firms' access to financial infrastructure. Atkins has pledged to end this practice, assuring that the SEC welcomes all market participants who are eager to innovate.
The SEC is also working to modernize custody rules for digital assets held by registered intermediaries, such as broker-dealers and investment advisers. This includes expanding custody options and streamlining compliance frameworks. Additionally, the SEC plans to update outdated rules that restrict the use of blockchain-based systems in capital markets. The goal is to create a regulatory environment that accommodates both intermediated and non-intermediated models, enabling decentralized systems like automated market makers to thrive.
In a related move, the SEC approved the first multi-crypto asset exchange-traded product (ETP) on July 29, 2025. The ETP will invest in both Bitcoin and Ether on a spot basis, marking a major step in integrating cryptocurrencies into mainstream financial markets. The SEC justified its approval by citing the ETP's consistency with the Securities Exchange Act of 1934. Furthermore, the SEC approved orders that permit in-kind creations and redemptions for crypto asset exchange-traded products (ETPs). This allows authorized participants (APs) to exchange the underlying crypto assets directly for shares of the ETP, reducing costs and increasing efficiency.
To oversee these changes, the SEC has formed a Crypto Task Force. Led by Commissioner Hester M. Peirce, the task force aims to provide clarity on the application of federal securities laws to the crypto asset market and recommend practical policy measures to foster innovation and protect investors. The Crypto Task Force will collaborate with Commission staff and the public to chart a new approach to regulating crypto assets.
"Project Crypto" has been met with widespread approval from the crypto industry. Venture capitalist Tim Draper praised the initiative, calling it a breakthrough toward an all-Bitcoin economy powered by blockchain-based accounting, smart contracts, and tokenized finance. SEC Chairman Paul S. Atkins stated that this change reflects the SEC's commitment to developing a “fit-for-purpose regulatory framework” for crypto assets.
