SEC Chairman Paul Atkins made it clear on December 10 that many types of initial coin offerings (ICOs) should be considered non-securities transactions and therefore fall outside the SEC’s jurisdiction.
He also emphasized that the SEC will focus its regulatory efforts exclusively on the category recognized as securities—tokenized securities, which are digital representations of traditional securities traded on-chain under SEC oversight.
01 Regulatory Turning Point
At the Blockchain Association’s Annual Policy Summit on December 10, U.S. Securities and Exchange Commission Chairman Paul Atkins delivered a speech that could reshape the regulatory landscape for the industry.
He stated unequivocally that many types of ICOs should be classified as non-securities transactions and thus are not subject to SEC regulation.
Atkins specifically referenced the token taxonomy he introduced last month, which divides the crypto sector into four major token categories. He previously noted that three of these—network tokens, digital collectibles, and digital utilities—should not be considered securities.
In his remarks on Tuesday, Atkins further clarified that ICOs involving these three token types should also be regarded as non-securities transactions, meaning they fall outside the SEC’s regulatory scope.
02 Regulatory Responsibilities
Atkins provided an unprecedentedly clear explanation of regulatory boundaries. He explained that initial coin offerings span four themes, three of which fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
"The SEC will let the CFTC handle those matters, while focusing on regulating tokenized securities," Atkins said. For ICOs, the SEC believes the only token category it should oversee is tokenized securities.
This clarified regulatory stance marks a new level of understanding of the crypto industry by U.S. regulators and offers clearer guidance for compliant industry development.
Atkins’ comments are seen as an encouragement for innovation in the crypto sector. He stated that, according to his definition, these types of tokens do not fall under the securities category, which is precisely what the SEC wants to encourage.
03 Token Classification Explained
Under Atkins’ token taxonomy, the crypto industry is divided into four major token categories, directly determining the regulatory pathway each will face.
Network tokens refer to functional tokens primarily used to access blockchain network services, such as those used to pay transaction fees.
Digital collectibles include unique digital assets like NFTs, which typically represent ownership of art, collectibles, or other distinctive digital items.
Digital utilities may encompass tokens with practical functions within specific ecosystems, such as in-game currencies or governance tokens for decentralized applications.
Only the fourth category—tokenized securities, representing digital forms of traditional securities ownership—will remain under SEC regulation.
04 Market Response
With regulatory clarity improving, the crypto market has seen a modest rebound. According to Gate Research Institute’s market analysis released December 10, BTC found buying support after a brief dip, currently quoted at 92,005 USDT, up 2.07% over the past 24 hours.
ETH has shown even stronger performance, rising 5.84% in 24 hours to 3,290 USDT.
Popular tokens have posted varied results. PIPPIN, boosted by the AI narrative, surged 66.39% in 24 hours. WET, which gained attention due to its TGE launch and expansion within the Solana ecosystem, rose 37.01%. PENGU, benefiting from Pudgy Penguins’ game downloads surpassing one million, climbed 10.46%.
Santiment data shows that BTC’s available supply on exchanges dropped by about 403,200 coins over the past year, indicating a significant shift of holdings from exchanges to self-custody or long-term addresses. This trend typically signals investors’ preference for long-term allocation, reducing active selling pressure and providing stronger support for spot prices.
05 Industry Impact
The SEC’s regulatory position will directly affect project teams’ fundraising options and legal risks. For teams planning to issue network tokens, digital collectibles, or digital utilities, they now have a clearer compliance pathway.
This change may encourage more innovative projects to raise funds through ICOs without fear of violating securities laws. Previously, regulatory uncertainty made many teams cautious about launching tokens in the U.S.
It also means project teams must carefully design and position their tokens to ensure they meet the definition of non-security tokens. The importance of legal frameworks and tokenomics design will become even more pronounced.
For investors, regulatory clarity may reduce legal risks associated with certain token types, but they should still carefully assess project fundamentals and potential value.
06 On-Chain Developments
With a more favorable regulatory environment, on-chain infrastructure and innovative applications are entering a new phase of opportunity. The Polygon network has completed its Madhugiri hard fork upgrade, boosting throughput by about 33% to nearly 1,400 TPS after architectural optimizations.
The core of this upgrade is the introduction of an adjustable block time mechanism, allowing future changes to block generation speed to be configured directly on-chain, rather than requiring a hard fork. This significantly reduces upgrade costs and system disruption.
Meanwhile, decentralized AI model platform FLock.io announced partnerships with AI-native liquidity infrastructure Deluthium and Base’s core liquidity hub Aerodrome to jointly build the next-generation on-chain inclusive finance platform, CARiFIN.
This collaboration aims to address structural issues in the micro-insurance market, including lack of trust, insufficient liquidity, and complex compliance requirements, providing target groups with more transparent, efficient, and sustainable insurance solutions.
07 Outlook
With the SEC’s regulatory stance now clear, the U.S. crypto industry may be entering a new phase of orderly development. Regulatory clarity offers traditional financial institutions a more stable legal environment for participating in the crypto market.
The implementation of the token taxonomy will also drive industry standardization, giving different token types clearer definitions and regulatory pathways. This could reduce regulatory arbitrage and foster healthy competition within the industry.
The CFTC’s role in crypto regulation will become increasingly prominent. As the SEC delegates oversight of three token categories to the CFTC, coordination and cooperation between the two agencies will become more important.
In the coming months, we may see more guidance documents on token classification and regulatory details, providing industry participants with more specific compliance directions.
Market Outlook
Crypto market sentiment indicators show the current Fear & Greed Index at 28, still in the "Fear" range, reflecting investors’ cautious mood.
However, as regulatory clarity improves, the market structure is undergoing fundamental changes. According to Gate Research Institute data, BTC supply on exchanges has dropped by more than 400,000 coins over the past year, indicating that more investors are choosing long-term holding over short-term trading. This structural shift provides a more solid foundation for market prices.
The SEC’s hands-off approach to most ICOs aligns with the trend of Bitcoin moving off exchanges and into long-term holders’ wallets, together outlining a dual recovery scenario for both regulation and the market.
