SEC debuts ‘Project Crypto' to bring U.S. financial markets ’on chain'

• The Securities and Exchange Commission on Thursday debuted “Project Crypto,” an initiative to “modernize” securities regulations to allow for crypto-based trading.
• The announcement comes amid a surge of interest in tokenization, the process of issuing digital representations on a blockchain of publicly-traded securities or other assets.
• SEC Chair Paul Atkins discussed the importance of preventing crypto companies from being driven offshore by “one-size-fits-all rules.”

The Securities and Exchange Commission on Thursday debuted “Project Crypto,” an initiative to modernize securities rules and regulations to allow for crypto-based trading.

“To achieve President Trump's vision of making America the crypto capital of the world, the SEC must holistically consider the potential benefits and risks of moving our markets from an off-chain environment to an on-chain one,” SEC chair Paul Atkins said in remarks to an “American Leadership in the Digital Finance Revolution” conference Thursday afternoon , referring to blockchain technology that enables cryptocurrencies, but has other applications as well.

“I have directed the Commission staff to update antiquated agency rules and regulations to unleash the potential of on-chain software systems in our securities markets ... Federal securities laws have always assumed the involvement of intermediaries that require regulation, but this does not mean that we should interpose intermediaries for the sake of forcing intermediation where the markets can function without them.”

The announcement comes amid a groundswell of investor interest in tokenization, or the process of issuing digital representations on a blockchain network of publicly-traded securities, real world assets or any other form of value. Holders of tokenized assets don't have outright ownership of the assets themselves. BlackRock CEO Larry Fink has said he sees the “tokenization of every financial asset” as an important step in “the technological revolution in the financial markets.”

Crypto trading platforms Robinhood, Gemini and Kraken have all opened tokenized equity offerings to users outside the U.S., and Coinbase has said it's pushing for SEC for approval to offer a similar service.

Super apps

Atkins, the SEC chair, highlighted “super apps” (such as one Coinbase introduced two weeks ago) as a priority of his chairmanship, noting the need to allow the apps to thrive with an “efficient licensing structure,” rather than subject to multiple regulatory authorities.

So-called super apps like WeChat and Alipay – which bundle several different services and functionalities into a single mobile app – have long been viewed as the holy grail of financial technology by the industry. They're central to everyday life in China but haven't been successfully replicated in the West. Meta Platforms and X have made attempts to realize that vision, integrating payments, messaging and social content, among other functions.

Atkins also said the Trump administration will work to prevent “innovative” companies from being driven offshore by burdensome regulations, and said the SEC “will encourage our nation's builders rather than constrain them with red tape and one-size-fits-all rules.”

The SEC proposal comes one day after the President's Working Group on Digital Asset Markets released a long-awaited report with recommendations for the SEC and other federal agencies to build a framework to boost U.S. dominance in digital asset markets. Atkins said he has directed the SEC's Crypto Task Force, led by Commissioner Hester Peirce, to work with other parts of the SEC to implement the working group recommendations.

The Thursday conference was sponsored by the America First Policy Institute, a think tank begun in 2021 to promote President Trump's policy agenda. The institute was founded by Brooke Rollins, the current Secretary of Agriculture, and Larry Kudlow, Trump's former director of the National Economic Council.

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