SEC Signals Major Shift With Plan to Classify Crypto Tokens, Paving Way for Regulatory Clarity

Washington — In a potentially pivotal move for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) has announced plans to develop a formal “token taxonomy” to classify digital assets, SEC Chair Paul Atkins revealed in a speech at a Federal Reserve fintech event.

What the SEC Is Proposing

Atkins said the SEC is considering creating a regulatory framework that distinguishes between different types of tokens — in particular, when a token should be treated as a security versus a commodity under U.S. law. Such a move could bring much-needed clarity to an industry that has long complained of murky, inconsistent enforcement.

More than just classification, the SEC may roll out a regulatory “package” of exemptions tailored to tokens legally recognized as securities. These exemptions could simplify the rules for issuers — allowing them to access broader investment structures without being burdened by full public offering requirements. 

Why This Is a Big Deal

For years, crypto projects have been caught in regulatory limbo. Under the previous SEC chair, Gary Gensler, the agency leaned heavily on enforcement, bringing high-profile lawsuits against firms like Coinbase and Ripple. Those actions often left the industry guessing about how to comply.

Now, with this shift, the SEC appears to be signaling a more structured and cooperative stance. The proposed taxonomy could create clearer rules on how tokens are treated — potentially reducing litigation risk and helping firms plan future token issuances.

Industry Reaction and Broader Context

The news has been welcomed by many in the crypto space who have long lobbied for regulatory certainty. By formally recognizing the differences among digital assets, the SEC may open the door for more innovation — especially for projects that don’t fit neatly into existing categories.

At the same time, this could align with recent legislative developments. In July 2025, the U.S. passed the GENIUS Act, putting in place national rules for stablecoins. The law requires these tokens to be backed one-to-one by low-risk assets (like U.S. dollars or Treasuries), and mandates transparency through reserve audits. With both congressional and regulatory efforts now underway, the U.S. seems to be building a more robust legal architecture for digital assets.

Meanwhile, the SEC’s pivot may also reflect broader political and market shifts. Under President Donald Trump’s administration — which has taken a more crypto-friendly approach — several Biden-era enforcement actions have been reevaluated or dropped.

Challenges and Risks Ahead

Despite the enthusiasm, significant questions remain. Defining a “token taxonomy” is legally and technically complex. Regulators will need to carefully balance innovation and consumer protection while crafting exemptions that don’t undermine existing securities rules.

Skeptics may worry that the exemptions could create loopholes. There’s also the risk that overly prescriptive rules could stifle new token models, especially those that don’t neatly fall into traditional categories.

Moreover, establishing the taxonomy won’t happen overnight. Atkins mentioned the framework could emerge in the “coming months,” but it will likely require extensive consultation, rulemaking, and possibly legislation — particularly for any exemptive regime.

What This Means for Crypto Investors

• More certainty for token issuers: Projects may launch with clearer expectations around whether or not they need to register as securities.
  
• Reduced legal risk: With formal definitions, firms may face fewer surprise enforcement actions.
  
• Potential for innovation: Tailored exemptions could foster a new generation of tokenized fundraising and financial products.
  
• Better disclosure: Investors could benefit from standardized regulatory disclosures, improving transparency.

A Watershed Moment for Crypto Regulation

The SEC’s proposal for a token taxonomy signals a watershed moment for crypto regulation. By drawing clearer lines between types of tokens and offering conditional exemptions, the commission is moving away from its historically enforcement-heavy approach and toward a more structured regulatory regime. If successfully implemented, this taxonomy could reshape how digital assets are issued, traded, and regulated — and may mark the beginning of a new, more stable era for the crypto industry.