On July 31st, 2025 SEC Chairman Paul Atkins announced Project Crypto — an initiative to "modernize the securities rules and regulations to enable America's financial markets to move on-chain."

"Under my leadership, the SEC will not stand idly by and watch innovations develop overseas while our capital markets remain stagnant."

The announcement signals a turning point after years of regulatory uncertainty. Project Crypto promises clear rules for determining whether tokens are securities, processes for launching in the U.S., and regulatory frameworks designed specifically for blockchain technology. 

The initiative represents a significant shift in the SEC’s crypto policy, potentially unlocking U.S. institutional capital, streamlining compliance processes, and enabling direct U.S. market access to compliant protocols. As domestic institutional investors gain clearer guidance to participate in token markets, protocols aligned with Project Crypto's vision could be well-positioned to benefit from increased institutional participation and market opportunities.

While Project Crypto is in its early stages, understanding the details of the SEC’s crypto initiatives will position protocol teams for future success.

Chairman Atkins acknowledged "confusion over the application of the 'Howey test' has led some innovators to prophylactically treat all crypto assets as such. Despite what the SEC has said in the past, most crypto assets are not securities."

The SEC plans to develop "clear guidelines that market participants can use to determine whether a crypto asset is a security or subject to an investment contract." These guidelines will help teams "slot crypto assets into categories, such as digital collectibles, digital commodities, or stablecoins, and assess the economic realities of a transaction."

Classification clarity means teams will be able to design tokens that fit specific, well-defined categories. The emphasis on "economic realities" suggests the SEC will focus on actual token functionality rather than theoretical risks, creating opportunities for projects with functional utility to meet clear regulatory requirements. 

“It is essential that any crypto asset regulatory market structure create a path for software developers to unleash on-chain software systems that do not require operation by any central intermediary."

The SEC plans to "draw reasonable lines to distinguish intermediated and disintermediated activity" and create "rational and workable rules of the road for intermediaries that seek to operate on-chain software systems."

This distinction signals projects that limit centralized control will be classified as a distinct asset class with tailored regulatory frameworks. 

Read early drafts of decentralization criteria and explore current on-chain governance frameworks.    

Regulatory flexibility for innovation & U.S. token launch viability 

The SEC plans to create "an innovation exemption that would allow registrants and non-registrants to quickly go to market with new business models and services that do not neatly fit within our existing rules and regulations."

Under this exemption, "innovators and visionaries will be able to immediately enter the market with new technologies and business models but will not be required to comply with incompatible or burdensome prescriptive regulatory requirements that hinder productive economic activity."

Additionally, Chairman Atkins declared: "The days of convoluted offshore corporate structures, decentralization theater, and confusion over security status, are over." The SEC will establish "clear and simple rules of the road for crypto asset distributions, custody, and trading."

Project Crypto aims to create frameworks for domestic token distributions to avoid regulatory complexity, including specific provisions for airdrops, network rewards, and initial token offerings. New token models will have pathways to launch with purpose-fit compliance rather than waiting for specific regulatory approval.

Project Crypto represents the foundation for a new era of regulated crypto innovation in America.  The SEC plans to advance from case-by-case crypto enforcement to comprehensive frameworks designed for digital assets. Project Crypto aims to establish clear classification guidelines, domestic launch frameworks, and regulatory flexibility for innovation.

Teams that prepare for these frameworks may be better positioned to capitalize on regulatory clarity, potentially accessing U.S. institutional capital while reducing compliance risks as new rules develop. As domestic institutional investors gain clearer guidance to participate in token markets, protocols aligned with Project Crypto's vision could be well-positioned to benefit from increased institutional participation and market opportunities.

At Tally, we’re building the infrastructure to help teams achieve institutional-grade compliance in the evolving regulatory landscape. The world’s most valuable networks use Tally to manage the complete token lifecycle and reach maturity with speed and confidence.

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