U.S. SEC Chairman’s latest speech: Say goodbye to a decade of chaos and enter an era of clarity in crypto regulation

# Remarks by Paul S. Atkins, Chairman of the U.S. Securities and Exchange Commission  

Compiled by Luffy, Foresight News  

Good morning, ladies and gentlemen! Thank you for that kind introduction, and thank you for inviting me here today as we continue our discussion on how the United States can lead the next era of financial innovation.  

When speaking recently about U.S. leadership in the digital financial revolution, I described "Project Crypto" as a regulatory framework we are building to match the dynamism of American innovators (Note: The U.S. Securities and Exchange Commission launched the Project Crypto initiative on August 1 this year, aiming to update securities rules and regulations to enable the on-chain transformation of U.S. financial markets). Today, I want to outline the next steps in this process. At the core of this phase is upholding the principles of basic fairness and common sense as we apply federal securities laws to crypto assets and related transactions.  

In the coming months, I anticipate the SEC (U.S. Securities and Exchange Commission) will consider establishing a token classification system based on the long-standing Howey test for investment contract securities, while acknowledging the boundaries of our legal and regulatory authority.  

Much of what I am about to share is built on the groundbreaking work of the Crypto Assets Task Force, led by Commissioner Hester Peirce. Commissioner Peirce has developed a framework to regulate crypto assets under securities laws in a coherent, transparent manner—focused on economic substance rather than slogans or fear. I want to reaffirm today that I share her vision. I value her leadership, her hard work, and her persistence in advancing these issues over the years. Having worked with her closely for a long time, I am delighted she agreed to take on this task.  

My remarks will center on three themes: first, the importance of a clear token classification system; second, the logic of applying the Howey test, recognizing that investment contracts can terminate; and third, what this means in practice for innovators, intermediaries, and investors.  

Before I begin, I also want to emphasize: While SEC staff are diligently drafting rule amendments, I fully support Congress’s efforts to enshrine a comprehensive crypto market structure framework into statute. My vision aligns with the bills currently under consideration in Congress, and it is intended to complement—not replace—Congress’s critical work. Commissioner Peirce and I have made supporting congressional action a priority, and we will continue to do so.  

I have enjoyed collaborating with Acting Chair Pham, and I wish Mike Selig—President Trump’s nominee for Chair of the Commodity Futures Trading Commission (CFTC)—a smooth and swift confirmation process. My experience working with Mike over the past few months has convinced me that we are all committed to helping Congress advance bipartisan market structure legislation expeditiously for President Trump’s signature. Nothing guards against regulatory overreach more effectively than sound statutory language enacted by Congress.  

To reassure my compliance team, let me include the standard disclaimer: The views I express today are my own, as Chairman, and do not necessarily reflect the views of other Commissioners or the SEC as a whole.  

## A Decade of Uncertainty  

If you are tired of hearing the question, "Are crypto assets securities?" I completely understand. The confusion arises because "crypto asset" is not a term defined in federal securities laws. It is a technical description that merely refers to how records are kept and value is transferred—it tells us almost nothing about the legal rights attached to a specific instrument or the economic substance of a particular transaction. Yet these are precisely the factors that determine whether an asset qualifies as a security.  

I believe most cryptocurrencies traded today are not themselves securities. Of course, a specific token may be sold as part of an investment contract in a securities offering. This is not a radical view—it is a straightforward application of securities laws. The statutes defining securities list familiar instruments like stocks, notes, and bonds, and add a broader category: "investment contracts." The latter describes a relationship between parties, not a permanent label attached to an object. Unfortunately, the statutes do not define it either.  

Investment contracts can be performed or terminated. An investment contract does not exist in perpetuity simply because the underlying asset of that contract continues to trade on a blockchain.  

Over the past few years, however, far too many have argued that if a token was once the subject of an investment contract, it is forever a security. This flawed view further presumes that every subsequent transaction involving that token—regardless of where or when it occurs—is a securities transaction. I struggle to reconcile this view with the text of the law, Supreme Court precedent, or common sense.  

Meanwhile, developers, exchanges, custodians, and investors have been navigating a fog. They lack guidance from the SEC, and instead face roadblocks. The tokens they see may function as payment tools, governance mechanisms, collectibles, or access keys—some are hybrid designs that fit no existing category. Yet for too long, the regulatory stance has treated all these tokens as equivalent to securities.  

This approach is neither sustainable nor practical. It imposes enormous costs with little benefit; it is unfair to market participants and investors, inconsistent with the law, and has driven entrepreneurs offshore. The reality is: If the United States insists that every on-chain innovation must navigate a minefield of securities laws, that innovation will move to jurisdictions more willing to distinguish between different types of assets and to set rules in advance.  

Instead, we will do what regulators should do: draw clear lines and explain them in plain language.  

## Core Principles of Project Crypto  

Before outlining my views on how securities laws apply to crypto assets and transactions, I want to clarify two guiding principles that shape my thinking.  

First, a stock remains a stock whether it is represented by a paper certificate, recorded in a Depository Trust & Clearing Corporation (DTCC) account, or issued as a token on a public blockchain. A bond does not cease to be a bond because its payment streams are tracked via a smart contract. Securities are securities, regardless of their form. This is easy to understand.  

Second, economic substance matters more than labels. If an asset essentially represents a claim on the profits of a business, and its offering is accompanied by a promise to rely on the core managerial efforts of others, calling it a "token" or a "non-fungible token (NFT)" does not exempt it from existing securities laws. Conversely, the fact that a token was once part of a financing transaction does not magically transform it into stock in an operating company.  

These principles are not new. The Supreme Court has repeatedly emphasized that we must focus on the substance of a transaction, not its form, when determining the applicability of securities laws. What is new is the scale and speed at which asset types are evolving in these new markets. This pace demands that we respond flexibly to the urgent need for guidance from market participants.  

## A Coherent Token Classification System  

Against this backdrop, I want to outline my current views on various categories of crypto assets (note: this list is not exhaustive). This framework has been shaped by months of roundtables, over a hundred meetings with market participants, and hundreds of written comments from the public.  

First, consistent with the bills currently under consideration in Congress, I believe "digital commodities" or "network tokens" are not securities. The value of these crypto assets is inherently tied to, and derived from, the programmatic operation of a "fully functional" and "decentralized" crypto network—not from the expected profits of others’ key managerial efforts.  

Second, I believe "digital collectibles" are not securities. These crypto assets are designed for collection and use, and may represent or confer rights to digital expressions or references to works of art, music, videos, trading cards, in-game items, or online memes, personas, events, or trends. Purchasers of digital collectibles do not expect to profit from the daily managerial efforts of others.  

Third, I believe "digital tools" are not securities. These crypto assets serve a practical function, such as memberships, tickets, vouchers, proof of ownership, or identity badges. Purchasers of digital tools do not expect to profit from the daily managerial efforts of others.  

Fourth, "tokenized securities" are, and will remain, securities. These crypto assets represent ownership of a financial instrument listed in the definition of "security," maintained on a crypto network.  

## The Howey Test, Promises, and Termination  

While most crypto assets are not themselves securities, they may be part of, or subject to, an investment contract. Such crypto assets are typically accompanied by specific representations or promises, and the issuer is required to perform managerial duties—thereby satisfying the Howey test.  

At its core, the Howey test requires: an investment of money in a common enterprise, with a reasonable expectation of profits derived from the core managerial efforts of others. A purchaser’s expectation of profits depends on whether the issuer has made representations or promises to undertake core managerial efforts.  

In my view, these representations or promises must clearly and unambiguously state the core managerial efforts the issuer will undertake.  

The next question is: How can a non-security crypto asset become separated from an investment contract? The answer is simple yet profound: either the issuer fulfills its stated representations or promises, fails to fulfill them, or the contract terminates for other reasons.  

To help illustrate this, let me tell you about a place in the rolling hills of Florida. I know it well from my childhood—it was once the home of William J. Howey’s citrus empire. In the early 20th century, Howey purchased over 60,000 acres of undeveloped land and planted orange and grapefruit groves around his mansion. His company sold plots of the orchard to individual investors and agreed to plant, harvest, and sell the fruit on their behalf.  

The Supreme Court reviewed Howey’s arrangement and established the test for defining investment contracts—a test that has shaped generations. But today, Howey’s land has changed dramatically. The mansion he built in Lake County, Florida, in 1925 still stands a century later, hosting weddings and other events. But most of the citrus groves that once surrounded it are gone, replaced by resorts, championship golf courses, and residential neighborhoods—a desirable retirement community. It is hard to imagine anyone standing on those fairways or cul-de-sacs today thinking they constitute a security. Yet for years, we have seen the same test applied rigidly to digital assets that have undergone equally profound transformations—still carrying the label they had at issuance, as if nothing had changed.  

The land around Howey’s mansion was never a security in itself. It became the subject of an investment contract through a specific arrangement, and when that arrangement ended, it was no longer bound by the investment contract. Of course, the land itself remained unchanged, even as the enterprise on it transformed completely.  

Commissioner Peirce observed correctly: A project’s token offering may involve an investment contract initially, but those promises are not perpetual. Networks mature, code is deployed, control is decentralized, and the issuer’s role diminishes or disappears entirely. At some point, purchasers no longer rely on the issuer’s core managerial efforts, and most token transactions no longer occur based on a reasonable expectation that "a team is still in charge." In short, a token is not forever a security because it was once part of an investment contract transaction—just as a golf course is not a security because it was once part of a citrus grove investment scheme.  

When an investment contract can be found to have been fully performed or terminated under its terms, the token may continue to trade. But these transactions are not securities transactions simply because of the token’s origin story.  

As many of you know, I am a strong supporter of "super apps" in finance—applications that, under a single regulatory license, allow for the custody and trading of multiple asset classes. I have asked SEC staff to prepare recommendations for the SEC’s consideration: allowing tokens associated with investment contracts to trade on platforms not regulated by the SEC, including intermediaries registered with the Commodity Futures Trading Commission (CFTC) or subject to state regulatory regimes. While the financing activity should still be regulated by the SEC, we should not hinder innovation and investor choice by requiring the underlying asset to trade only in one regulatory environment.  

Importantly, this does not mean fraud suddenly becomes acceptable, or that the SEC’s focus diminishes. Anti-fraud provisions still apply to false statements and omissions in connection with the sale of an investment contract—even if the underlying asset itself is not a security. And, of course, to the extent these tokens qualify as commodities in interstate commerce, the Commodity Futures Trading Commission (CFTC) also has anti-fraud and anti-manipulation authority to act against misconduct in the trading of these assets.  

This means our rules and enforcement will align with the economic reality that investment contracts can terminate and networks can operate independently.  

## Crypto Regulatory Actions  

In the coming months, as envisioned in the bills currently under consideration in Congress, I hope the SEC will also consider a series of exemptions to establish a tailored offering regime for crypto assets that are part of, or subject to, an investment contract.  

I have asked staff to prepare recommendations for the SEC’s consideration—recommendations designed to facilitate financing, embrace innovation, and ensure investor protection.  

By streamlining this process, innovators in the blockchain space can focus on development and user engagement, rather than navigating a maze of regulatory uncertainty. Moreover, this approach will foster a more inclusive and dynamic ecosystem, allowing smaller projects with limited resources to experiment freely and thrive.  

Of course, we will continue to work closely with our counterparts at the Commodity Futures Trading Commission (CFTC), banking regulators, and Congress to ensure that non-security crypto assets have an appropriate regulatory framework. Our goal is not to expand the SEC’s jurisdiction, but to allow financing to flourish while ensuring investors are protected.  

We will continue to listen. The Crypto Assets Task Force and relevant divisions have held numerous roundtables and reviewed extensive written comments, but we need more feedback. We need input from investors, from developers worried about delivering on their code, and from traditional financial institutions eager to participate in on-chain markets but reluctant to violate rules written for the paper era.  

Finally, as I mentioned earlier, we will continue to support Congress’s efforts to enshrine a sound market structure framework into statute. While the SEC can issue reasonable interpretations under existing law, future SECs could always change course. That is why tailored legislation is so important—and why I am pleased to support President Trump’s goal of enacting crypto market structure legislation by the end of the year.  

## Integrity, Understandability, and the Rule of Law  

Now, let me be clear about what this framework does NOT include. It is not a promise by the SEC to ease up on enforcement. Fraud is fraud. While the SEC protects investors from securities fraud, there are many other federal regulators with the authority to police and prevent illegal conduct. That said, if you raise funds by promising to build a network and then abscond with the money, we will find you and take the strongest possible action under the law.  

This framework is a commitment to integrity and transparency. For entrepreneurs who want to build in the United States and are willing to follow clear rules, we should offer more than a shrug, a threat, or a subpoena. For investors trying to distinguish between buying tokenized stock and buying a game collectible, we should offer more than a complex web of enforcement actions.  

Most importantly, this framework reflects a humble recognition of the SEC’s own jurisdictional boundaries. Congress enacted securities laws to address a specific problem: situations where people entrust money to others based on promises tied to the others’ integrity and competence. These laws were not intended to be a one-size-fits-all charter for regulating every new form of value.  

## Contracts, Freedom, and Responsibility  

Let me close with a historical reflection from Commissioner Peirce’s speech this past May. She invoked the spirit of an American patriot who risked everything—even his life—to defend the principle that free people should not be governed by arbitrary edicts.  

Thankfully, our work does not require such sacrifice, but the principle is the same. In a free society, the rules governing economic life should be knowable, reasonable, and appropriately constrained. When we stretch securities laws beyond their intended scope—when we presume every innovation is guilty—we depart from this core principle. When we acknowledge the limits of our authority—when we recognize that investment contracts can terminate and networks can stand on their own merit—we uphold it.  

A reasonable SEC approach to crypto will not, by itself, determine the fate of the market or any specific project. That will be up to the market. But it will help ensure that the United States remains a place where people can experiment, learn, fail, and succeed—under rules that are firm and fair.  

That is what Project Crypto is about. That is what the SEC should strive for. As Chairman, I promise you today: We will not let fear of the future trap us in the past. We will not forget that behind every token debate are real people—entrepreneurs working to build solutions, workers investing for their future, and Americans striving to share in the prosperity of this nation. The SEC’s role is to serve all three.  

Thank you, and I look forward to continuing this dialogue with you in the months ahead.  

【Disclaimer】The market is risky, and investment requires caution. This article does not constitute investment advice. Users should consider whether any opinion, view, or conclusion in this article is consistent with their specific situation. Investment decisions made based on this article shall be the sole responsibility of the investor.