SEC Chair Paul Atkins stated Tuesday that most initial coin offerings (ICOs) should not be classified as securities.
His comments indicate a potential regulatory shift that could reinvigorate a fundraising method long constrained by federal oversight.
Speaking at the Blockchain Association’s policy summit, Atkins noted that many ICOs fail to meet the legal criteria defining a security. Consequently, they fall outside the jurisdiction of the Securities and Exchange Commission.
He explained that these offerings involve token types that “do not fit” the agency’s definition of an investment product, placing them beyond the SEC’s reach.
Framework Behind the SEC Chair’s Position
Atkins based his remarks on a token taxonomy he introduced last month. The framework divides digital assets into four categories, distinguishing between those that function like investments and those that do not.
According to Atkins, three categories — network tokens, digital collectibles, and digital tools — do not exhibit the characteristics traditionally associated with securities. Consequently, they merit distinct regulatory treatment.
Only the fourth category, tokenized securities, falls squarely under existing SEC rules.
Atkins further suggested that oversight of the remaining categories fall under the Commodity Futures Trading Commission (CFTC). The commission has historically employed a lighter-touch regulatory approach.
Shift From Prior Enforcement Era
The chair’s remarks contrast with the SEC’s posture during the 2017 ICO boom. At that time, the agency pursued enforcement actions against several token issuers, alleging they conducted unregistered securities sales. Those cases pushed many firms away from ICO-based fundraising and reshaped the market.
Atkins’ latest comments suggest the agency may be open to revisiting that stance. His view also comes as lawmakers continue to debate a broader bill on crypto market structure that could formalize rules for token issuance.
Implications for Token Issuers
If adopted, the approach outlined by Atkins could give companies more flexibility when launching token-based fundraising campaigns.
Under his taxonomy, many tokens tied to decentralized networks, internet trends, or practical functions, such as memberships or access tools, would not trigger securities requirements. That distinction could reduce compliance burdens and encourage the introduction of new offerings.
Atkins also highlighted the SEC’s “Project Crypto” initiative, which he discussed in July. He said the program could introduce exemptions and safe harbors that support compliant token launches, offering firms a clearer path toward raising capital.
Industry Moves Ahead of Regulation
Meanwhile, several companies are advancing their own ICO strategies even without new legislation.
Last month, Coinbase launched a platform for U.S. token offerings following its October acquisition of fundraising firm Echo for $375 million. Tokens issued through the service are available to U.S. retail users, reflecting renewed interest in ICO activity across the sector.