Narrow Scope for ICO Oversight
SEC Chair Paul Atkins stated on Tuesday at the Blockchain Association’s annual policy summit that many initial coin offerings (ICOs) should fall outside the agency’s authority. He outlined a token taxonomy that classifies most offerings as non-securities, explaining why most ICO activity belongs under the Commodity Futures Trading Commission (CFTC).
Atkins referenced a token framework he introduced last month to define four token types across the crypto sector. He said the SEC should only regulate tokenized securities, which represent traditional securities that already fall under existing rules.
He added that ICOs tied to the other three categories should be treated as non-security transactions. Atkins said network tokens, digital collectibles, and digital tools do not meet the criteria of securities.
He noted that these tokens appear across decentralized networks, internet culture, and practical services. He said related ICOs should therefore remain outside SEC review, a comment that signaled a clear shift from the agency’s earlier interpretation of ICOs.
However, he also stated that the CFTC oversees three of the four token categories in his framework. This division influenced his view that the SEC should avoid regulating offerings linked to commodities-like assets, placing the agency’s focus solely on tokenized securities.
Proposed Taxonomy Changes Regulatory Boundaries
Atkins said the SEC intends to encourage projects that issue tokens without securities-like features. He argued that developers need clarity as they navigate uncertain classifications, supporting his earlier remarks in July about the agency’s “Project Crypto” effort, which he said could support exemptions and safe harbors.
This also revived regulatory debates from the 2017 ICO boom. During that period, the SEC pursued cases against several issuers for selling unregistered securities, which slowed ICO activity in the United States. Atkins’ new stance suggested that the earlier blanket approach may no longer apply.
Coinbase recently expanded its involvement in token launches. The company acquired Echo for $375 million in October and launched a new platform for U.S. retail users, demonstrating industry movement that continues regardless of pending Senate discussions on a crypto market structure bill.
Implications for Token Categories and Market Structure
Atkins listed multiple examples of tokens he believes do not qualify as securities under his taxonomy. These include tokens linked to decentralized blockchain networks, internet memes, characters, current events, and trend-based digital collectibles. He also cited tokens that function as access tools, such as tickets or memberships.
This position placed most token types under the CFTC, which generally applies lighter oversight. Still, Atkins acknowledged that ICOs span all four categories, creating multiple regulatory tracks. He said the SEC will therefore focus on tokenized securities while leaving the other categories to the CFTC.
Notably, industry stakeholders have followed these developments closely as they plan new fundraising structures. The debate also extends to questions about how issuers define utility, ownership, and functionality in new token models, issues that remain central to how regulators judge offerings.
The discussion also connects to the long-running dispute between the SEC and CFTC over digital asset jurisdiction. Atkins’ framework suggests a more defined division. According to him, most digital assets fit better within commodity-oriented rules, while only tokenized securities require SEC supervision.
Atkins’ comments show a shift, as he said most ICOs fall outside the SEC’s jurisdiction. His taxonomy places network tokens, digital collectibles, and digital tools under the CFTC. His remarks point to a narrower SEC role as the industry prepares for renewed interest in token offerings.