SEC Unveils “Project Crypto” to Replace Enforcement-First Model With Clear Asset Rules

The Division of Corporation Finance at the U.S. Securities and Exchange Commission, led by Director James Moloney, is advancing a new regulatory framework for digital assets under an initiative titled “Project Crypto.”

Announced on February 13, 2026, the proposal aims to replace the prior enforcement-heavy posture with structured, rule-based guidance.

The initiative forms part of a broader harmonization effort with the Commodity Futures Trading Commission to clarify jurisdiction across the expanding tokenized asset market.

A Four-Part Digital Asset Taxonomy

Project Crypto proposes a classification system dividing digital assets into four categories:

• Digital Commodities: Assets that do not carry an expectation of profit based on managerial efforts, often aligning with CFTC oversight.
• Digital Collectibles: Unique tokens, such as certain NFTs, that are not structured as investment contracts.
• Digital Tools: Utility-focused tokens used within decentralized networks.
• Tokenized Securities: Traditional financial instruments represented on blockchain infrastructure, remaining under SEC supervision.

The framework seeks to define boundaries that have historically been determined through case-by-case litigation rather than formal rulemaking.

Pathway to “Non-Security” Status

Two primary recommendations are under preparation:

1. Interpretive Guidance: A clarified test for determining when a crypto asset qualifies as an investment contract.
2. Decentralization Exit Mechanism: A new regulation allowing certain tokens to transition out of securities status once networks become sufficiently decentralized and issuer-driven managerial efforts cease.

For tokens that remain securities, the SEC plans to propose simplified compliance structures governing issuance and secondary trading.

Broader Corporate Reporting Changes

Beyond crypto-specific reforms, Director Moloney outlined modernization efforts across corporate reporting standards:

• Semi-Annual Reporting Option: In alignment with Chairman Paul Atkins’ priorities, companies may gain the option to report financial results twice annually instead of quarterly.
• HFIAA Implementation: Beginning March 18, 2026, directors and officers of Foreign Private Issuers must report stock transactions under a self-executing rule.
• Innovation Exemption: The SEC is considering a regulatory sandbox allowing firms to test new financial products under supervision without immediate enforcement exposure.

Structural Implications

Project Crypto represents a material shift in regulatory philosophy, moving from reactive enforcement toward predefined classification standards. The initiative also reflects coordination between the SEC and CFTC to present a unified approach to the approximately $2 trillion tokenized asset sector.

If implemented, the framework could reduce compliance uncertainty, clarify jurisdictional disputes, and provide clearer pathways for asset classification and network evolution. The Commission’s next steps will determine how quickly these proposals transition from conceptual guidance to binding regulation.

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