Is the U.S. ICO Spring Coming? SEC Chair Clarifies: Most Token Offerings Are Not Securities, Fall Under CFTC Oversight

Paul Atkins, Chairman of the U.S. Securities and Exchange Commission (SEC), has issued what may be the most explicit pro-regulation signal in recent years. At the Blockchain Association Policy Summit, he cited the “Token Classification Framework” he proposed last month, clearly stating that initial coin offerings (ICOs) related to network tokens, digital collectibles, or digital utilities should not be considered securities offerings and therefore fall outside the SEC’s jurisdiction.

This means the vast majority of ICO activities may fall under the more relaxed oversight of the Commodity Futures Trading Commission (CFTC), potentially reopening the long-dormant U.S. ICO market. Atkins also pledged to swiftly advance “innovation exemption” policies in the new year, offering the industry a much-needed sense of reassurance.

SEC Boundaries: Only One of Four Token Types Under Our Jurisdiction

The “gray fog” of U.S. crypto regulation is being pierced by a bright light. On December 10, new SEC Chairman Paul Atkins provided the clearest guidance yet from regulators at the highest level on the years-long debate over “what is a security.” He reiterated the core of his “Token Classification Framework”: dividing crypto assets into four categories, of which only one should be defined as a security.

Specifically, Atkins believes the following three types of tokens and their corresponding ICO activities should not be considered securities transactions: network tokens (tokens related to the functions of decentralized blockchain networks), digital collectibles (tokens referencing internet memes, characters, current events, or trends), and digital utilities (tokens providing tickets, memberships, or other utility functions). He emphasized that all three should be regulated by the CFTC. The SEC will focus solely on the fourth type: tokenized securities—those representing traditional securities already regulated by the SEC, but traded on-chain.

This division is revolutionary. It directly addresses the industry’s core demand—clarity. Since the 2017 ICO boom was quashed by the SEC’s “regulation by enforcement” approach under former Chairman Jay Clayton, any project involving token issuance has faced enormous legal uncertainty. Atkins’ statements not only draw a clear boundary but also convey a positive stance encouraging innovation and providing a safe harbor for legitimate activities. He even said at the summit, “This is exactly what we want to encourage.”

Atkins Token Classification Framework and Regulatory Assignments

• Network Tokens: Tokens related to decentralized blockchain network operations, governance, or functionality (such as many Layer 1 public chain tokens).
  • ICO Nature: Not a securities offering.
  • Primary Regulator: CFTC.
• Digital Collectibles: Tokens referencing internet memes, characters, current events, or trends (such as many NFT projects).
  • ICO Nature: Not a securities offering.
  • Primary Regulator: CFTC.
• Digital Utilities: Tokens providing tickets, memberships, access rights, or other specific utility functions.
  • ICO Nature: Not a securities offering.
  • Primary Regulator: CFTC.
• Tokenized Securities: Tokens issued on-chain that represent traditional financial assets like stocks or bonds.
  • ICO Nature: Securities offering.
  • Primary Regulator: SEC.

On the Eve of an ICO Revival: Regulatory Clarity Ignites Market Enthusiasm

“You haven’t seen anything yet.” Atkins used this phrase to describe the SEC’s upcoming crypto agenda, the most direct impact of which may be the strong comeback of ICOs as a financing method. With the regulatory path suddenly clarified, major institutions are already betting on this trend. In October, leading exchange Coinbase acquired token issuance platform Echo for $375 million and launched a new ICO platform for U.S. retail investors last month.

These moves are no coincidence. They show that industry leaders foresee that, regardless of whether Congress passes sweeping market structure legislation, the pragmatic reforms under Atkins’ leadership at the SEC are sufficient to clear obstacles for certain types of token offerings. Atkins mentioned that his “crypto initiative” will pave the way for ICOs by providing regulatory exemptions and safe harbor provisions. This “regulation before legislation” approach starkly contrasts with former Chairman Gary Gensler’s insistence that all token issuers follow the traditional securities registration process.

The market has responded quickly and positively. Although concrete rules have yet to be implemented, the top regulator’s stance has already greatly reduced the compliance trial-and-error costs for the industry. Startups can now design token economic models with greater confidence; as long as their tokens are clearly classified as network, collectible, or utility tokens, they can avoid direct conflict with the SEC. This is sure to spur a new wave of token issuance experiments, especially those focusing on utility and community governance rather than profit promises.

From “Regulation by Enforcement” to “Classification-Based Regulation”: A Paradigm Shift in U.S. Crypto Policy

Atkins’ remarks mark a fundamental shift in U.S. crypto regulatory philosophy. Looking back at the Gensler era, the SEC’s core strategy was widely criticized as “regulation by enforcement”—not providing clear rules in advance, but instead prosecuting major projects after the fact to “make an example,” leaving the industry to guess the red lines in fear. This resulted in high compliance costs, stifled innovation, and drove numerous projects and capital overseas.

Atkins is now implementing a “classification-based regulation” paradigm, centered on forward-looking rulemaking and clear jurisdictional boundaries. His token classification framework seeks to create a comprehensible and actionable regulatory coordinate system for this complex industry. Assigning most tokens to the CFTC aligns with their essential nature as “digital commodities.” The CFTC’s approach to derivatives markets has historically focused on anti-fraud and market manipulation, not rigorous disclosure, making its oversight relatively relaxed.

The deeper reason for this shift may be anxiety over the U.S. lagging behind regions like the UAE and EU in the global crypto race. Atkins revealed in his speech that one of the top priorities for the new year is to launch an “innovation exemption” framework to provide conditional, time-limited regulatory relief for crypto and fintech projects, lowering compliance costs and encouraging experimentation. He expects this to be announced around the end of January. This shows the SEC is trying to shift from being an “innovation roadblock” to an “innovation accelerator,” hoping to attract global crypto talent and capital back to the U.S.

Still Unresolved: The Race Between Congressional Legislation and Regulatory Action

Despite the SEC’s abrupt shift, the final landscape of U.S. crypto regulation still hinges on a key variable: Congress. The Market Structure Bill, aimed at comprehensive crypto oversight and clear delineation of SEC and CFTC responsibilities, is currently struggling in the Senate. If passed, the bill would codify the classification principles advocated by Atkins into law, giving them greater stability and authority.

Atkins himself admitted, “We’ll see what Congress comes up with.” This suggests the SEC’s actions and Congressional legislation are running in parallel. One possible scenario is that the SEC uses its administrative power to quickly introduce “innovation exemptions” and classification-based guidance, providing immediate certainty to the market; meanwhile, Congressional legislation would provide a more solid legal foundation for this framework and address more complex interagency coordination issues.

However, even if Congressional legislation is stalled or delayed, the SEC under Atkins still has considerable autonomy. Its “crypto initiative” and classification guidance are sufficient to provide the industry with a relatively stable and predictable environment for quite some time. This “administration-first” strategy ensures that regulatory reform will not be paralyzed by Congressional gridlock. For those seeking clarity, an actively engaged SEC is far more valuable than one waiting for perfect legislation.