SEC Chair Paul Atkins Unveils Project Crypto, Greenlighting ICOs, Airdrops And More

In brief

SEC Chair Paul Atkins announced numerous major policy initiatives the regulator is now undertaking to bring crypto activity back to the United States.
New rules would greenlight many crypto-related practices previously discouraged or outright banned in the U.S.
The rollout comes a day after the White House released its own crypto policy recommendations, many of which were reflected in the SEC’s new initiatives.

SEC Chair Paul Atkins said Thursday the agency plans to soon offer purpose-fit disclosures, exemptions, and safe harbors for crypto offerings, including ICOs, airdrops, and network rewards, in a sweeping speech announcing the regulator’s new “Project Crypto” initiative.

“I would like the world to go on notice that under my leadership, the SEC will not stand idly by and watch innovations develop overseas while our capital markets remain stagnant,” Atkins said, speaking steps away from the White House at a press event.

“[T]oday I am announcing the launch of “Project Crypto”—a Commission-wide initiative to modernize the securities rules and regulations to enable America’s financial markets to move on-chain,” the chair continued.

The finer points of the plan are far reaching, touching on exemptions for crypto transactions subject to securities laws, the unregistered trading of crypto asset investment contracts, and the protection of decentralized software developers.

But the throughline is clear: effectively, everything the crypto industry wanted to do under the tenure of former SEC chair Gary Gensler, but couldn’t, is now on the table.

Atkins made explicit Thursday that crypto initiatives that have long excluded U.S. customers from their distribution channels for fear of legal repercussions, like airdrops and initial coin offerings (more commonly known as ICOs), should in short order no longer have to make such carveouts.

“It is my view that a Cambrian explosion in innovation could occur if we stay true to this course,” Atkins said.

Additionally, the chair said he has already directed SEC staff to develop a framework that would allow brokers and dealers to offer both non-security crypto assets and traditional securities side by side, and engage in services like crypto asset staking and lending, without needing to obtain multiple licenses.

SEC staff has further been directed to evaluate whether non-security crypto assets that are subject to an investment contract should be permitted to trade on unlicensed platforms, Atkins said—a major shakeup in existing agency policy.

Atkins’ comments also touched on decentralized finance, or DeFi, long a sore spot for crypto industry leaders who have argued for years that developers of autonomous financial software should not have to register with the agency as intermediaries.

The SEC chair said the agency is working on creating a formal category within the agency’s regulatory apparatus for DeFi software systems, and pledged to protect “pure publishers of software code” and draw “reasonable lines to distinguish intermediated and disintermediated activity.”

Atkins’ “Project Crypto” rollout comes a day after the White House released a sprawling 168-page report on crypto policy recommendations, many of which were reflected in the new SEC initiatives outlined today.