U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins stated on Tuesday that many types of crypto initial coin offerings (ICOs) should not be classified as securities transactions, and therefore should fall outside the regulatory authority of the SEC.

Speaking at the Blockchain Association’s annual policy conference, Atkins responded to questions from CoinPhoton and emphasized that the SEC aims to encourage innovation where appropriate:

> “That is exactly what we want to encourage,” Atkins said. “Those types of transactions would not meet the definition of a security as we understand it.”

Four Token Categories: Only One Falls Under SEC Control

Atkins highlighted the four-token classification framework he introduced last month, which divides the crypto industry into four major token categories:

1. Network Tokens – tokens that power decentralized blockchain networks

2. Digital Collectibles – such as NFTs and meme-linked tokens

3. Digital Tools – utility tokens used for access, membership, or functional services

4. Tokenized Securities – blockchain-based representations of traditional securities

According to Atkins, the first three categories should NOT be classified as securities, meaning that ICOs involving these token types should also be considered non-securities transactions and remain outside SEC oversight.

> “Only tokenized securities should remain under SEC regulation,” Atkins clarified.

Tokens that fall into the tokenized securities category represent assets already regulated by the SEC—such as stocks or bonds—but issued and traded on blockchain technology.

CFTC to Oversee Most ICOs Under This Framework

Atkins further stated that three of the four token categories fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC) rather than the SEC:

> “ICOs span across all four themes. Three of them fall under the CFTC’s authority, so we will let them handle those. The SEC will focus on tokenized securities.”

Since the CFTC traditionally applies a lighter regulatory approach than the SEC, this shift could significantly reduce compliance barriers for crypto startups seeking to launch ICOs.

SEC Temporarily Halts High-Leverage Crypto ETF Applications

On the same day, the SEC also issued warning letters to issuers of high-leverage ETFs, including several crypto-linked leveraged ETF proposals.

The agency has paused the review process until issuers adequately address the significant risk concerns raised by regulators.

A total of nine ETF issuers received these warnings, including ProShares, a major player in leveraged ETF products. This move underscores the SEC’s ongoing caution surrounding high-risk crypto investment vehicles.

ICOs Could Make a Comeback After Years of Suppression

ICOs were a dominant fundraising method during the 2017 crypto boom. However, they were effectively shut down after the SEC—under the Trump administration—sued multiple ICO issuers for selling unregistered securities.

Atkins’ recent remarks signal that ICOs may soon experience a revival, regardless of whether the long-awaited crypto market structure bill passes through Congress.

Under his proposed framework, most crypto tokens would be regulated by the CFTC rather than the SEC, potentially restoring legal clarity for:

Decentralized blockchain network tokens

Meme-based and trend-driven tokens

Utility tokens used for access, tickets, memberships, and digital services

All of these token types could soon be considered legitimate for ICO issuance.

“Project Crypto” and Safe Harbor Rules Could Accelerate ICO Adoption

In July, Atkins revealed that the SEC’s “Project Crypto” initiative could provide safe harbor protections and regulatory exemptions, allowing startups to conduct ICOs under defined compliance conditions.

Even without finalized legislation, the crypto industry is already acting.

Coinbase Launches ICO Platform After $375 Million Echo Acquisition

Last month, Coinbase officially launched a new ICO platform following its $375 million acquisition of token-fundraising firm Echo in October.

Tokens issued through this platform are now available to U.S. retail investors, marking a massive shift in accessibility and signaling that the ICO market infrastructure is rapidly being rebuilt—with or without new laws.

Final Thoughts

Paul Atkins’ statements mark a potential turning point for the global crypto fundraising landscape. If implemented as described, the majority of ICOs could operate outside SEC jurisdiction, reduce regulatory friction, and open the door to a new era of token-based capital formation in the United States.

This could reshape how startups raise money, how retail investors gain access to early-stage projects, and how the U.S. competes with other crypto-friendly jurisdictions around the world.

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