SEC Not Awaiting Congressional Action on Cryptocurrency, According to 'Crypto Mom' Peirce
In the realm of digital finance, the U.S. Securities and Exchange Commission (SEC) is making significant strides with its comprehensive initiative, "Project Crypto." Announced by Chairman Paul Atkins in July 2025, this project aims to modernise U.S. securities regulations, making them more adaptable to digital assets such as cryptocurrencies, stablecoins, and tokenized securities[1][2][4].
Key progress and current status include:
- Clarification of Crypto Asset Classification: The SEC is working diligently to establish clear guidelines that will help distinguish between crypto assets classified as securities, stablecoins, digital commodities, or digital collectibles. This move aims to address the legal uncertainty surrounding the application of the Howey test[1][3][4].
- Regulatory Framework for Crypto Distributions and Trading: The SEC staff is drafting clear, simple rules for crypto asset distributions, custody, and trading. This includes proposed purpose-fit disclosures, exemptions, and safe harbours for offerings such as initial coin offerings (ICOs), airdrops, and network rewards[1][2][3].
- Facilitating Tokenized Securities and DeFi Integration: Project Crypto seeks to enable the tokenization of traditional securities (stocks, bonds, partnership interests) and support their trading on decentralized finance (DeFi) platforms like automated market makers. This shift moves beyond the traditional central intermediaries[1][2].
- Modernization of Custody and Intermediary Rules: Recognising the need for intermediaries in the digital asset space, the SEC plans to update custody rules originally designed without crypto in mind. This update will include exemptions and rule adjustments to better accommodate digital asset custody and ease institutional participation[3].
- Coordination with the CFTC: Project Crypto follows a broader federal push, including coordination with the Commodity Futures Trading Commission (CFTC), to revamp crypto regulation. Both agencies have launched initiatives inspired by President Trump’s January 2025 executive order, aiming to make the U.S. a global crypto innovation hub and clarify regulatory boundaries[3].
- Use of Interpretive and Exemptive Relief: While formal rules are being developed, the SEC has instructed staff to use interpretive and exemptive relief to prevent stifling innovation, signalling a more flexible and innovation-friendly approach than past administrations[1][4].
As of August 2025, Project Crypto is actively shaping a new regulatory framework that clarifies crypto asset definitions, updates trading and custody rules, embraces DeFi and tokenization, and promotes regulatory coordination with the CFTC to foster innovation while protecting investors[1][2][3][4].
It's worth noting that the SEC is not waiting for specific congressional legislation regarding cryptocurrency. Instead, they are holding meetings with various industry leaders to shape the future of digital finance in the U.S.[5]
Commissioner Hester Peirce, who has emphasised a good relationship between the SEC and the CFTC, has stated that "Project Crypto" is progressing well and a lot of work can be done under the agency's existing authority[6]. However, the bill, which has drawn criticism from industry players for giving the SEC too much power, is still under debate[7].
References: 1. SEC's "Project Crypto" Seeks to Modernize U.S. Securities Regulations for Digital Assets 2. SEC's "Project Crypto" Aims to Clarify Crypto Asset Definitions and Facilitate DeFi and Tokenization 3. SEC and CFTC Coordinate on Moving Forward with Crypto Regulations 4. Commissioner Peirce Discusses the Progress of "Project Crypto" on Bloomberg TV 5. SEC Holds Meetings with Industry Leaders to Shape the Future of Digital Finance 6. Peirce: A Lot of Work Can Be Done Under the SEC's Existing Authority with "Project Crypto" 7. Criticism Mounts as Senate Releases Draft of Landmark Crypto Market Structure Bill
- The U.S. Securities and Exchange Commission (SEC) is utilizing interpretive and exemptive relief to prevent stifling crypto innovation, signaling a flexible approach within Project Crypto.
- Commissioner Hester Peirce has praised the progress of Project Crypto, stating that a substantial amount of work can be accomplished under the SEC's existing authority.
- As part of Project Crypto, the SEC aims to establish clear guidelinesfor distinguishing between cryptocurrencies, stablecoins, digital commodities, and digital collectibles, addressing the legal uncertainty around the Howey test.
- Project Crypto seeks to modernize U.S. securities regulations, enabling blockchain technology to facilitate tokenized securities and DeFi integration, moving beyond traditional central intermediaries in the finance and business sector.
