U.S. Regulatory Update: SEC Chair talks “Token Taxonomy,” Discussion on CLARITY Act Moves Forward

Crypto regulation: After several quiet weeks in Washington due to the now-ended government shutdown, U.S. policymakers returned with meaningful movement on two pillars of upcoming digital asset regulation: the SEC’s administrative initiative, “Project Crypto,” and Congress’s legislative framework, the CLARITY Act.

• Why it matters: Taken together, these efforts point toward the same objective: establishing long-delayed legal clarity by defining what counts as a digital commodity versus a security and dividing supervisory authority between the SEC and CFTC. If successful, they would create the most coherent U.S. market structure for crypto to date and form the foundation for compliant, onshore innovation.

Inside Project Crypto: On Wednesday, SEC Chairman Paul Atkins delivered a speech at the Federal Reserve Bank of Philadelphia and provided more detailed insights into the agency’s progress on establishing a token taxonomy, starting with his current thinking on which categories of crypto assets constitute a security and which do not:

• "Digital commodities, or network tokens, digital collectibles, [and] digital tools such as a membership, ticket, or identity badge, are, in my opinion, not securities. […] Tokenized securities are and will continue to be securities."

Expiring investment contracts: Perhaps even more importantly, he elaborated on the changing nature of investment contracts in the case of crypto, for the first time explicitly making the case that a token born as part of a securities offering does not remain a security indefinitely:

• "Networks mature. Code is shipped. Control disperses. The issuer’s role diminishes or disappears. At some point, purchasers are no longer relying on the issuer’s essential managerial efforts, and most tokens now trade without any reasonable expectation that a particular team is still at the helm. In short, a token is no more a security because it was once part of an investment contract transaction than a golf course is a security because it used to be part of a citrus grove investment scheme."

Progress on CLARITY: Meanwhile, the Senate Agriculture Committee released its long-awaited market-structure discussion draft, a prerequisite for advancing the CLARITY Act. The draft must eventually be merged with the Senate Banking Committee’s version before reaching the full Senate, but its publication signals that negotiations — repeatedly delayed over the summer — are now moving again.

Unclarity on DeFi? Drawing heavily from the U.S. House's version of CLARITY, the draft lays out the definition of a digital commodity and adds stronger provisions for user protection, CFTC supervision, and self-custody. Yet large parts of the blockchain-specific text remain in brackets, and the sections on DeFi and anti-money-laundering were left blank.

In the waiting room: One explanation, according to people close to the process, is that the Agriculture Committee is waiting for the Banking Committee, which has jurisdiction over financial-institution rules, to set clearer guardrails for DeFi, node operators, wallet providers, and developers.

• “We are hoping that the section left open for DeFi will be filled in with robust developer protections that clearly distinguish centralized intermediaries from software developers without custody and control of other people’s money,” said Amanda Tuminelli, Executive Director of the DeFi Education Fund.

Faustine Fleuret is Head of Public Affairs at Morpho, where she oversees regulatory affairs of the DeFi lending protocol.

U.S. and EU regulators agree that DeFi needs dedicated rules, but their approaches are moving in opposite directions.

The U.S., through CLARITY, is taking a pragmatic route. It begins by defining DAOs and trading protocols and outlining early exemptions for DeFi before any binding rules exist. The goal is to acknowledge how DeFi functions and then determine what should be covered (or not) by new regulations. This fits with the U.S. focus on sufficient decentralization, which treats decentralization as a spectrum.

Europe’s MiCA framework does the reverse. It builds a full regulatory regime upfront without first settling key definitions and relies on full decentralization as a rigid threshold. This binary view fails to capture how diverse DeFi systems actually are and reflects a more conceptual approach of the sector.

The result: the gap is widening. The U.S. is positioning itself to build a workable DeFi framework, while Europe risks locking itself into frameworks that cannot adapt.