What Is SEC Chair Paul Atkins' Token Taxonomy and Why It Could Revive ICOs in the U.S. in 2025

As of December 10, 2025, SEC Chair Paul Atkins delivered a game-changing message at the Blockchain Association’s annual policy summit: the majority of initial coin offerings (ICOs) should not be classified as securities, placing them outside the SEC’s regulatory reach and potentially under the CFTC’s lighter-touch oversight.

Responding to a direct question from Decrypt, Atkins emphasized that ICOs tied to network tokens, digital collectibles, or digital tools fall into non-security categories under his newly proposed token taxonomy—unveiled last month as part of the SEC’s “Project Crypto” initiative. This stance signals a dramatic pivot from the enforcement-heavy era under former Chair Gary Gensler, potentially unleashing a wave of compliant ICO fundraising even before comprehensive market structure legislation passes.

What Is the Token Taxonomy Proposed by SEC Chair Atkins

Atkins’ token taxonomy is a classification framework designed to bring long-overdue clarity to U.S. crypto regulation by categorizing digital assets into four distinct types, rooted in the Howey Test for investment contracts. Introduced in November 2025 at the Federal Reserve Bank of Philadelphia’s Fintech Conference, it explicitly states that three of the four categories—network tokens, digital collectibles, and digital tools—are not inherently securities, while only “tokenized securities” (blockchain representations of traditional securities like stocks or bonds) would fall under SEC jurisdiction. This approach aims to foster innovation by distinguishing utility-driven tokens from investment contracts promising profits from others’ efforts.

The taxonomy builds on Commissioner Hester Peirce’s foundational work and represents a core pillar of “Project Crypto,” the SEC’s ongoing effort to update rules for digital assets. As of late 2025, it positions the agency to regulate smarter, not harder, focusing on true securities while deferring commodities to the CFTC.

• Anchored in the Howey Test to avoid overreach on non-investment assets
• Applies to ICOs, NFTs, DeFi tokens, and emerging blockchain tools
• Emphasizes explicit managerial promises as the key securities trigger
• Part of broader SEC reforms under Atkins’ pro-innovation leadership
• Aligns with trends in decentralized finance and wallet security standards

Which Types of ICOs Are Outside SEC Purview According to Atkins

Atkins explicitly called out ICOs for network tokens (e.g., those powering decentralized blockchains like Bitcoin or Ethereum), digital collectibles (e.g., NFTs representing art, memes, or cultural items), and digital tools (e.g., utility tokens for access, tickets, or software functions) as non-securities. These would not trigger SEC registration or disclosure requirements, allowing issuers to proceed under existing laws without fear of enforcement actions. Only ICOs for tokenized securities—mirroring regulated assets like equities on-chain—would remain under SEC oversight.

This delineation revives the 2017 ICO boom’s spirit but with guardrails: no more blanket assumptions that every token sale is an unregistered offering. Atkins noted, “That’s what we want to encourage,” highlighting the taxonomy’s role in shifting many ICOs to the CFTC’s domain for commodities like spot Bitcoin trading.

• Network tokens: Value from decentralized network operations, not promoter efforts
• Digital collectibles: Reference trends, characters, or art without profit expectations
• Digital tools: Provide practical utility like memberships or access rights
• Tokenized securities: Only category requiring SEC compliance for ICOs
• Enables CFTC oversight for non-security ICOs with streamlined rules

How Atkins’ Stance Differs from Past SEC Enforcement

Under Gensler (2021–2025), the SEC pursued aggressive “regulation by enforcement,” suing ICO issuers like those behind Telegram’s TON and Kik’s Kin for failing to register as securities, chilling U.S. fundraising. Atkins, a veteran advocate for lighter-touch rules, is flipping the script: his taxonomy concedes that “cryptocurrencies can be part of an investment contract, but it doesn’t mean they will stay that way forever.” This evolves the Howey Test’s application, focusing on explicit profit promises rather than token form alone.

As of December 2025, this shift has already led to closed investigations (e.g., Ondo Finance) and pro-crypto guidance from the OCC and CFTC, creating a fertile ground for ICO revival without waiting for bills like the Responsible Financial Innovation Act.

• Moves from presuming most tokens as securities to case-by-case analysis
• Reduces enforcement risks for compliant, utility-focused projects
• Encourages U.S.-based innovation amid global competition
• Complements CFTC’s recent digital asset collateral pilot
• Boosts confidence in blockchain trends like stablecoin issuance

Implications for Crypto Fundraising and ICO Revival in 2025

Atkins’ comments could spark a U.S. ICO renaissance, drawing billions in capital to compliant launches on networks like Ethereum or Solana. With tokenized RWAs surging (e.g., Ondo’s Treasury products), non-security ICOs for DeFi tools or collectibles could explode, especially as market structure markup looms next week per Senator Lummis. This taxonomy provides immediate safe harbors, potentially outpacing legislation and positioning the U.S. as a leader in regulated blockchain fundraising.

Broader crypto trends benefit: clearer rules enhance wallet security adoption and DeFi liquidity, while reducing FUD for retail and institutional players.

• Potential for $10B+ in new U.S. ICO volume by mid-2026
• Attracts developers fleeing offshore due to past uncertainties
• Supports stablecoin and NFT ecosystems under lighter regimes
• Aligns with GENIUS Act for tokenized asset clarity
• Risks: Still requires careful Howey compliance to avoid missteps

SEC Chair Paul Atkins’ token taxonomy and ICO guidance mark a pivotal pro-crypto turn in 2025, clarifying that most token sales aren’t securities and paving the way for innovation without endless enforcement threats.

For blockchain enthusiasts eyeing ICOs, consult official SEC resources and legal experts for Howey-aligned launches. Prioritize secure, compliant platforms to navigate this evolving regulatory landscape.