SEC Chair Proposes New Token Taxonomy as Crypto Rules Take Shape

U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins has opened the door to one of the agency’s most consequential policy shifts in years, revealing that he is considering the creation of a formal “token taxonomy” to clarify how different digital assets should be classified under federal law. 

The remarks, delivered Wednesday at the Federal Reserve Bank of Philadelphia’s FinTech Conference, mark the latest move in Washington to define the regulatory perimeter of the fast-growing crypto sector.

Atkins’ comments come at a pivotal moment for U.S. digital asset oversight. After years of enforcement-driven policymaking and prolonged uncertainty for crypto businesses, both regulators and lawmakers appear increasingly eager to build a clearer, coordinated framework. 

While Congress debates market structure legislation, the SEC chair is now signaling an internal effort that could reshape how the agency approaches crypto assets for years to come.

Atkins Says Most Tokens Are Not Securities

During his speech, Atkins said the agency is weighing a taxonomy that would be “anchored in the longstanding Howey investment contract securities analysis,” a reference to the 1946 Supreme Court test used to determine whether an asset is a security. 

But the initiative—part of the agency’s broader “Project Crypto” effort—appears designed to separate digital assets into clearer categories rather than automatically subject them to securities rules.

Crucially, Atkins emphasized that, in his view, the majority of crypto tokens do not qualify as securities at all. He described digital commodities, digital collectibles, and digital tools as falling outside the securities definition, saying these categories do not represent ownership of a financial instrument in the way traditional securities do.

Tokenized securities, however, would be treated differently. These instruments, he said, “represent the ownership of a financial instrument enumerated in the definition of ‘security’ that is maintained on a crypto network,” and therefore clearly fall under the SEC’s existing mandate.

Atkins did not specify how granular the taxonomy might be or whether certain categories would trigger new disclosure obligations or exemptions. But the remarks reflect a shift in tone for the SEC under his leadership—one that leans toward a more permissive, innovation-friendly posture.

Aiming for Clarity Without Overriding Congress

Atkins took care to frame the initiative as complementary to, not competitive with, ongoing legislative efforts. The taxonomy “aims to complement, not replace, Congress’s critical work,” he said, acknowledging the growing appetite on Capitol Hill for comprehensive crypto legislation.

He added that any regulatory classification should not be seen as determinative of the industry’s direction. “A reasonable Commission approach to crypto will not by itself decide the fate of the market—or of any particular project,” Atkins said. “Markets will do that.”

What the SEC can do, he argued, is establish rules that are “both firm and fair,” enabling innovators to “experiment and learn, fail and succeed” within a predictable regulatory environment. 

The remarks reflect his effort to balance regulatory certainty with deference to the competitive dynamics of emerging technologies.

The creation of a taxonomy could also help streamline how regulators differentiate between tokens that function as commodities, utilities, collectibles, or securities—an issue that has dogged both the SEC and market participants for years. By drawing clearer lines, Atkins is positioning the agency to reduce friction with the Commodity Futures Trading Commission (CFTC), which also plays a key role in digital asset oversight.

Congress Pushes Forward With New Market Structure Draft

Atkins’ remarks landed just days after a significant development in Congress: the unveiling of a new bipartisan crypto market structure discussion draft by Senate Agriculture Committee Chairman John Boozman (R-AR) and Senator Cory Booker (D-NJ).

While the draft does not create new classification rules on its own, it outlines a far more formal cooperation mandate for the SEC and the CFTC. The legislation specifically directs the two agencies to “collaborate on necessary inter-agency rulemakings,” signaling that lawmakers want a unified approach to regulating the digital asset trading ecosystem.

Boozman, whose committee has jurisdiction over the CFTC, framed the draft as essential to preparing the agency for an expanded role. 

“As Congress works to expand authority for the commission to oversee the trading of digital assets that are commodities, it’s essential that we also ensure it has the tools, personnel, and resources necessary to carry out this new mission, along with its current responsibilities,” he said.

The collaboration mandate could ultimately intersect with Atkins’ proposed taxonomy, particularly in cases where an asset’s classification determines which agency has jurisdiction. If both efforts advance, 2025 could mark the most substantial overhaul of U.S. digital asset market structure since Bitcoin’s emergence more than a decade ago.

Toward a More Coherent Regulatory Era

The dual pressure from Capitol Hill and the SEC’s internal review is creating a rare moment of alignment in the typically fragmented U.S. regulatory landscape. While substantial disagreements remain—especially around the boundaries of securities law—signals from both branches suggest a shared goal of bringing clarity to a market that has operated in regulatory limbo.

For crypto companies, the possibility of a federal token taxonomy represents a potential turning point. 

Over the past several years, the SEC has often relied on enforcement actions to define the boundaries of its authority, an approach critics say created unnecessary uncertainty for developers, issuers, and investors. Atkins’ comments suggest that the agency is now more open to building guardrails upfront, rather than through litigation after the fact.

Still, much remains unknown. The taxonomy remains in the exploratory stage, and Congress’s bipartisan draft is just that—a draft. The months ahead will determine whether the two tracks converge into a more unified policy framework or deepen existing divides.

For now, however, the signals from Washington are clear: both regulators and lawmakers appear ready to shift from debate to definition, bringing the crypto market closer to the long-awaited regulatory clarity that industry leaders have been calling for.