SEC Chair Paul Atkins says ICOs linked to network tokens, collectibles, and digital tools are not considered securities.
Non-security ICOs will fall under the CFTC’s regulation, easing regulatory burdens for businesses.
The SEC’s focus on tokenized securities could encourage a revival of ICO fundraising in the U.S. without heavy oversight.
SEC Chair Paul Atkins recently clarified that many types of initial coin offerings (ICOs) are outside the U.S. Securities and Exchange Commission’s (SEC) oversight. During a discussion at the Blockchain Association’s annual policy summit, Atkins explained when replying to a question from Decrypt that ICOs tied to network tokens, digital collectibles, and digital tools do not qualify as securities. As a result, these offerings will not fall under SEC regulation. The shift could revitalize ICO fundraising in the U.S
SEC’s Token Taxonomy and ICO Regulations
As it was reported by CryptoNewsland, Atkins introduced a token taxonomy that categorizes crypto tokens into four general groups. Of these, only tokenized securities will be regulated by the SEC. Tokens related to networks, collectibles, and digital tools will not be considered securities under this new framework. Atkins stressed that ICOs related to these non-security tokens should be treated as non-securities transactions.
“These sorts of things would not fall, as we would define it, into the definition of a security,” Atkins stated. His remarks reflect the SEC’s evolving stance on crypto tokens, with a focus on making regulations clearer for businesses. The SEC will regulate only tokenized securities, allowing ICOs for other types of tokens to move forward without regulatory barriers.
CFTC to Regulate Non-Security Tokens
While the SEC will continue overseeing tokenized securities, ICOs tied to network tokens and digital tools will fall under the Commodity Futures Trading Commission (CFTC). The CFTC’s regulatory approach is viewed as lighter compared to the SEC’s more stringent rules. According to Atkins, the CFTC will take the lead in regulating many of the ICOs previously considered under the SEC’s jurisdiction.
The companies that are going to issue ICOs will not have to deal with the regulatory hassles relating to non-security tokens thanks to this shift. The new approach will allow the businesses to fund their activities through ICOs without being under the heavy scrutiny of the SEC. Atkins pointed out that the SEC will continue to concentrate on the regulation of tokenized securities while the other tokens will be managed by the CFTC.
A Potential Revival for ICO Fundraising
The SEC’s latest policy change could mark the beginning of a new wave of ICO activity in the U.S. With the SEC narrowing its focus to tokenized securities, ICOs linked to network tokens, collectibles, and digital tools can proceed with less regulatory friction. This could encourage more companies to raise funds through token sales.
Despite a lack of market structure legislation, companies appear ready to proceed with ICO projects under the new regulatory landscape. Platforms like Coinbase, which recently launched its own ICO platform, may further drive the growth of ICOs in the U.S.
Atkins’ comments highlight a significant shift in U.S. crypto regulation, with ICOs now potentially seeing a more favorable regulatory environment. This could lead to more innovation in the token sale market and greater clarity for businesses and investors.