SEC New Guidelines: What the Reclassification of ICO Means for the Crypto Market

The Chair of the U.S. Securities and Exchange Commission, Paul Atkins, has recently provided a renewed perspective on how the regulator understands initial coin offerings. In his speech at the Blockchain Association Annual Policy Summit, Atkins explained that the SEC distinguishes between different types of ICOs based on the nature of the digital assets they represent.

The Token Taxonomy: Four Defined Categories

The regulatory proposal is based on an innovative classification recently introduced by the SEC. This taxonomy divides the crypto universe into four distinct segments. Three of these categories—the network infrastructure tokens, digital collectible assets, and digital utilities—should not be subject to SEC oversight according to the regulatory approach Atkins advocates. These types of ICOs, in his interpretation, lack the characteristics that define securities in the traditional sense.

What Does the SEC Regulate in the World of ICOs?

The regulatory body focuses exclusively on a specific category: tokenized securities. These are digital representations of securities already regulated conventionally by the SEC and traded on blockchain networks. This delineation is crucial to understanding which types of projects can conduct ICOs without automatically facing Wall Street supervision.

Atkins clarified that ICOs cover four areas of potential oversight. However, three of these areas have been delegated to the (CFTC) U.S. Commodity Futures Trading Commission. The SEC will relinquish jurisdiction over these domains, allowing the CFTC to lead regulation in these matters. In this way, the SEC concentrates solely on monitoring projects involving securities tokenization, avoiding regulatory duplication.

Implications for the Crypto Ecosystem

This clarification represents a step toward defining more precise regulatory boundaries. By establishing that many ICOs do not fall under its jurisdiction, the SEC opens a space where projects with utility or infrastructure tokens can develop with greater legal certainty. The implied collaboration between the SEC and the CFTC suggests a coordinated approach to avoid regulatory overlaps that could hinder innovation.