Paul Atkins: SEC Confirms Token Classification Guidelines Are Coming Soon Paul Atkins, Chairman of the U.S. Securities and Exchange Commission (SEC), stated during his testimony before the House Financial Services Committee on February 11 that the SEC is advancing the establishment of a "token taxonomy" to provide a clearer regulatory framework for the digital asset market, in alignment with market structure legislation currently being pushed by Congress. Token Classification Guidelines The guidelines will explicitly include tokenized securities within the federal securities law definition of "securities" and categorize them into two types based on their support model: ▪️ Issuer-Sponsored: Blockchain is directly integrated into ownership records. While ownership innovations do not alter the applicability of securities laws, issuance and trading must still comply with registration requirements (unless exempt). ▪️ Third-Party Sponsored: Tokens are issued by third parties who custody the underlying securities or provide synthetic exposure through "linked securities." The guidelines emphasize that tokenization as a technological innovation does not create new exemptions but provides investors and market participants with a predictable path to compliance. The SEC reiterated that regulatory judgments should be based on economic substance rather than technical form. Collaborating with CFTC on Project Crypto Key focuses of the project include: ▪️ Developing a token taxonomy to clarify the boundaries between securities, commodities, and other digital assets ▪️ Exploring compliance approaches for on-chain transactions, tokenized collateral, and derivatives ▪️ Enhancing cross-agency information sharing, regulatory coordination, and supervisory collaboration The SEC and CFTC emphasized that while maintaining independent enforcement authority, they aim to achieve maximum alignment of regulatory standards and practices through daily cooperation and regular leadership communication. Clarity Act and Other Legislation Still Advancing Relevant digital asset market structure legislation in both chambers, including the CLARITY Act, is still under review. The SEC and CFTC stated they will act within their existing statutory authority while preparing coordinated implementation for future legislation.