What is Project Crypto?
In his November 12, 2025 “Project Crypto” speech, Chairman Atkins outlined a move toward applying the framework of the federal securities laws to real-world token functionality. In short: Tokens that behave like digital shares or bonds will continue to be regulated as securities, while tokens associated with early fundraising are not treated as securities for that reason alone.
Since 1946, the SEC has applied the Howey test to determine whether or not a particular investment constitutes a security. In Howey, courts must consider a) whether investors are putting in money, b) whether their fortunes are tied to others in a common enterprise, c) whether they reasonably expect profits, and d) whether those profits depend on the managerial or entrepreneurial efforts of a promoter or third party.
In his speech, Atkins asked SEC staff to develop a more structured approach that defines token categories, explains when issuer commitments no longer drive investor expectations for the purposes of Howey, evaluates where tokens should trade once they operate independently, and considers exemptions that could create a tailored offering regime. He noted that this effort is intended to provide clearer and more practical guidance and to move in parallel with Congressional work on digital-asset market structure.
Key themes
Token taxonomy
Atkins outlined four categories as an initial guide:
- Network tokens: Used to run or access a functioning network and generally outside the securities laws when users rely on network utility rather than managerial efforts
- Digital collectibles: Non-fungible tokens (NFTs) and similar assets tied to artwork, entertainment, or cultural value
- Digital tools: Tokens that function as memberships, tickets, credentials, or other access mechanisms
- Tokenized securities: On-chain representations of traditional financial instruments such as shares or notes
When does the Howey analysis end?
A central theme of the speech was the role of Howey and the importance of issuer-driven promises. Atkins emphasized that investment contracts arise when purchasers reasonably rely on a team’s ongoing managerial efforts. Those commitments, however, do not last indefinitely. Once the promised work is complete, the network functions on its own, and users no longer depend on the team, the investment-contract analysis may no longer apply.
At that point, continued trading of the token may fall outside the securities laws. However, anti-fraud protections remain fully in place, and the Commodity Futures Trading Commission (CFTC) retains authority to address fraud and manipulation in commodity token markets.
Secondary trading and venues
Atkins noted that once issuer-driven commitments have ended, tokens may appropriately trade on platforms outside the SEC’s jurisdiction, including CFTC-registered or state-regulated venues. Tokenized securities would remain within SEC-regulated markets, while non-securities would fall into the regulatory structures aligned with their characteristics.
This does not create new pathways today but signals a potential future in which trading venue requirements depend on the substance of the asset rather than its history.
A tailored offering regime
Atkins indicated that the SEC may consider exemptions that would create a tailored offering regime for token projects. The goal is to offer clearer, more workable fundraising paths for early-stage development while preserving essential investor protections. Disclosures would center on development milestones, governance, and any continuing commitments. This initiative is expected to advance alongside Congressional efforts to build a broader digital-asset market structure.
What should firms be thinking about now?
Market participants should monitor the SEC’s work as staff recommendations and any rule proposals begin to take shape. They should consider how their existing assets and activities would align with the emerging token categories and whether any early-stage commitments remain relevant to the securities analysis. Clear and accurate public disclosures will remain important as the regulatory framework evolves. It will be important to follow developments across the SEC, CFTC, and Congress, as coordination among these bodies will influence trading venue options and market structure. At this stage, the most appropriate focus is awareness and preparation rather than changes to existing practices.
What happens next?
SEC staff are expected to provide the recommendations requested by Chairman Atkins in the coming months, while Congress continues working on broader digital-asset legislation. Atkins noted that the SEC’s effort is intended to move in parallel with that process, and that the Administration has set a goal of passing crypto market-structure legislation by year end. Firms should expect more clarity on token categories, the end of issuer commitments under Howey, potential trading pathways for non-securities, and elements of a tailored offering regime. Staying alert to these developments and keeping documentation current will help firms prepare as the framework takes shape.
Client Alert 2025-290
