SEC Chair: Most ICOs Not Securities, Paving Way for Crypto Innovation

SEC Chair Paul Atkins stated most ICOs, including network tokens, digital collectibles, and digital tools, are not securities and fall outside SEC oversight, shifting regulation to the CFTC and encouraging crypto innovation.

SEC Chair Paul Atkins has clarified that many initial coin offerings (ICOs), including those involving network tokens, digital collectibles, and digital tools, should not be classified as securities and therefore fall outside the SEC’s jurisdiction. Instead, these types of tokens would be overseen by the Commodity Futures Trading Commission (CFTC), which applies a lighter regulatory approach. Atkins introduced a new token taxonomy, stating that only tokenized securities—blockchain representations of traditional securities—would remain under SEC oversight. This stance is intended to encourage innovation in the crypto sector by reducing regulatory pressure on non-security token offerings. Atkins also announced plans to “future-proof” crypto regulations, proposing amendments to rules governing securities trading to better accommodate tokenized alternatives and enable financial institutions to hold crypto assets for customers. The SEC is preparing to introduce an “innovation exemption” to fast-track new crypto products, aiming to lower compliance costs and foster experimentation. These changes signal a shift from previous SEC leadership and could revive ICO fundraising in the U.S. while clarifying the division of regulatory responsibilities between the SEC and CFTC.