SEC Unveils Next Phase of Crypto Regulatory Clarity → Markets

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Briefing

SEC Chairman Paul Atkins outlined the next phase of “Project Crypto” on November 12, 2025, signaling a pivotal shift towards bringing greater legal clarity to crypto assets. This initiative means investors can anticipate a more predictable regulatory environment, moving away from past enforcement-focused approaches. The most important data point indicating this change is the SEC’s plan for formal rule proposals in 2026, which will establish a comprehensive crypto asset framework and amend existing securities laws.

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Context

Before this announcement, the crypto market operated under a cloud of regulatory uncertainty, with many participants questioning when clear and consistent rules would emerge. The SEC’s prior approach, often dubbed “regulation by enforcement,” created a fragmented landscape, leaving market participants to wonder if the US would foster or stifle digital asset innovation.

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Analysis

This shift by the SEC is rooted in the recognition that focusing solely on whether crypto assets themselves are investment contracts proved problematic, leading to “innovation flight” and “compliance chaos.” The new phase of “Project Crypto” aims to clarify asset classification, establishing a formal “token taxonomy” that distinguishes between securities and other digital assets like meme coins, proof-of-work mining activities, stablecoins, and staking activities, which are generally not considered securities. This means the SEC is now emphasizing the nature of the transaction or relationship that makes something a security, rather than the token itself. Think of it like a ticket to a concert → the ticket itself is not a security, but if you buy a share in the concert promotion company with the expectation of profit from their efforts, that’s an investment contract. This clearer distinction is designed to reduce ambiguity and encourage responsible development within the US market.

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Parameters

Project Crypto Announcement Date → November 12, 2025. This is the date SEC Chairman Atkins delivered remarks outlining the next phase of the initiative.
Formal Rule Proposals Expected → 2026. The Office of Information and Regulatory Affairs signaled formal SEC rule proposals are coming to establish a comprehensive crypto asset framework.
Innovation Exemption Rulemaking → Expected end of 2025 or early 2026. This framework would allow companies to test novel business models under principles-based safeguards.
Key Policy Shift → Moving from “regulation by enforcement” to structured, predictable rules.

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Outlook

In the coming weeks and months, market participants should closely monitor the development of the “Regulation Crypto” proposal and the formal token taxonomy. Concrete details on these proposed rules will provide the actionable framework that investors and innovators have been seeking. Additionally, continued coordination between the SEC and the CFTC, alongside any legislative progress in Congress, will be crucial indicators of whether this trend towards regulatory clarity will be sustained and effectively implemented.

The SEC’s “Project Crypto” is set to transform the US digital asset landscape by providing much-needed regulatory clarity and fostering innovation.

Signal Acquired from → Sidley Austin LLP