The SEC is modernizing its rules to bring the U.S. financial markets onto the blockchain

(SEC) Paul S. Atkins has stated that the agency is taking "historic steps to modernize rules and regulations to facilitate the market's transition to blockchain-based trading."

7/6/20264 min read

ACT Strategy: Develop, Clarify, Transform

In a speech at the Washington Economic Club published on April 21, Atkins organized the entire SEC regulatory modernization program around the three-pillar "ACT" strategy, a framework that has guided all of the agency's subsequent actions up to his appearance at the New York Economic Club on June 30. The ACT strategy is based on three distinct but closely linked pillars: Developing a legal framework for the modern era; Clarifying jurisdictional boundaries; and Transforming the SEC's rule set by returning to fundamental principles.

The "Development" pillar acknowledges that current securities rules are drafted for a cryptocurrency market structure where brokers, exchanges, and clearinghouses are separate types of organizations—a structure that blockchain protocols have essentially disrupted by incorporating those functions into single software implementations. As Atkins stated at the AI+ Show in May: "A single protocol can execute transactions, manage collateral, route liquidity, execute trading strategies through the storage structure, and settle transactions."

The SEC's progressive agenda responds by developing rules that address multi-functional blockchain protocols as integrated systems rather than forcing their separation into traditional institutional categories designed for centralized intermediaries.

The "Clarification" pillar directly addresses the long-standing jurisdictional ambiguity between the SEC and CFTC, which has created significant compliance uncertainty for digital asset companies while also subjecting them to overlapping regulatory jurisdictions.

CFTC Chairman Mike Selig and Mr. Atkins signed a historic Memorandum of Understanding between the two agencies, unifying key definitions, clarifying jurisdictions, and coordinating oversight in areas of mutual interest, including digital assets. This memorandum removes the unregulated territory that Mr. Atkins described as having left "a pile of potential financial products" scattered across a blurred jurisdictional boundary for decades.

The "Transformation" pillar commits the SEC to rebuilding its rulebook from foundational principles rather than adapting blockchain innovation to disclosure frameworks designed for... the paper-era market. Atkins describes how legacy disclosure requirements have evolved from tools designed to clarify the market to tools that obscure it through compliance complexity, establishing the philosophical basis for a comprehensive revision of the rulebook rather than a piecemeal revision.

Four out of five categories are not securities.

The U.S. Securities and Exchange Commission (SEC) has released a classification table for cryptocurrency tokens, differentiating between five categories of digital assets, four of which are not securities. This classification table represents the most significant legal action in the implementation of the Crypto Project, providing pre-launch classification clarity, allowing entrepreneurs and investors to determine whether a cryptocurrency asset falls under SEC jurisdiction before investing development capital, eliminating the legal risk fees that have previously limited U.S. venture capital investment in blockchain infrastructure.

The classification table's announcement that four out of five digital asset classes fall outside the SEC's securities jurisdiction represents a significant reversal from the Gensler-era SEC's stance that most cryptocurrencies were securities subject to registration requirements, removing a key legal hurdle that forced large digital asset businesses to relocate from the United States to foreign jurisdictions—a legal migration that Atkins explicitly cited when warning that excessive rigidity causes innovation to move overseas, while also mentioning the collapse of FTX as a catastrophic result of inadequately supervised foreign markets.

The clarity this classification system provides has immediate practical value: token issuers can now determine in advance whether their particular asset design creates legal liability under securities law, rather than having to learn about the legal status through enforcement actions, and trading platforms can confidently list assets classified outside the scope of securities law without fear that each listing decision will render the platform legally liable under securities law. This pre-launch clarification mechanism transforms the SEC from a passive enforcement agency into an active regulatory partner in the development of digital assets.

On-chain RWA context and legal urgency

The total real assets (RWA) on the chain recently surpassed $20 billion, and large institutions such as JPMorgan and Ondo Finance have begun settling tokenized Treasury transactions directly on the chain. This creates a real urgency for the SEC and CFTC to determine exactly how to handle these instruments before the market expands further without consistent oversight.

The RWA tokenization milestone, coinciding with the Crypto Project's rollout, demonstrates that regulatory modernization efforts are responding to real-world market developments rather than anticipating future theoretical adoption. Institutional market participants including BlackRock, Franklin Templeton, and Ondo Finance have deployed tokenized products on a large scale while the regulatory framework remains unresolved – proving that market-driven adoption often outpaces legal clarity, creating precisely the legal risk premium that the Crypto Project is designed to eliminate through pre-determined regulation, not post-determined enforcement.

Assessment and Conclusion

Atkins' remarks at the Economic Club established the most comprehensive high-level regulatory commitment to on-chain financial market infrastructure in U.S. regulatory history, marking a fundamental shift from the previous administration's enforcement-based approach toward proactive facilitation, where blockchain technology is clearly positioned as essential infrastructure for the future, rather than a regulatory issue to be restrained. This moment came four days before the Senate vote on the CLARITY Act, setting the impetus for coordinated, mutually reinforcing legislation and regulation, rather than requiring sequential completion.

For the digital asset market in particular, the combination of the five-category token classification, the impending innovation exemption, the SEC-CFTC Memorandum of Understanding, and the Crypto Project's formal rule-building agenda has removed the key regulatory uncertainty that institutional investors have cited as a major constraint on digital asset allocation decisions, potentially unlocking large-scale capital deployment from institutions that have maintained sub-strategic exposure to cryptocurrencies while awaiting regulatory clarity. The policy environment that Atkins is building may prove more important for long-term institutional adoption than any market structure or price catalyst.

Disclaimer: The information presented in this article is the author's personal opinion in the field of cryptocurrencies. This is not financial or investment advice at all. Every investment decision should be based on careful consideration of your personal portfolio and risk tolerance. The opinion in the article does not represent the official position of the platform. We recommend that readers do their own research and consult experts before making any investment decisions.

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