• Network tokens linked to decentralized blockchains avoid securities classification.

• Digital collectibles referencing memes, characters, or trends are exempt from SEC rules.

• Digital tools providing functions like tickets or memberships, with over 70% of 2017 ICOs now potentially unregulated under this taxonomy.

Discover which ICOs are not securities according to SEC Chair Paul Atkins. Explore non-security token types and implications for crypto fundraising in 2025. Stay informed on regulatory shifts today.

What Types of ICOs Are Not Considered Securities by the SEC?

ICOs not considered securities include those for network tokens, digital collectibles, and digital tools, as outlined by SEC Chair Paul Atkins. These categories fall outside the SEC’s definition of securities, allowing them to proceed without registration under securities laws. Atkins emphasized encouraging such transactions to foster blockchain innovation, shifting oversight to the Commodity Futures Trading Commission (CFTC) for most crypto activities.

How Does the SEC’s Token Taxonomy Classify Non-Security ICOs?

The SEC’s token taxonomy, introduced by Chair Paul Atkins last month, divides tokens into four categories: network tokens, digital collectibles, digital tools, and tokenized securities. Network tokens support decentralized blockchain networks and enable peer-to-peer transactions without centralized control. Digital collectibles often tie to internet memes, characters, current events, or cultural trends, functioning more like unique digital assets than investment contracts.

Digital tools offer practical utilities, such as access tickets, memberships, or software functionalities within blockchain ecosystems. According to Atkins’ framework, ICOs in these three areas do not meet the Howey Test criteria for securities, which requires an investment of money in a common enterprise with expectations of profits from others’ efforts. This classification draws from established legal precedents and aims to clarify regulatory boundaries.

Supporting data from the 2017 ICO boom shows that thousands of projects raised billions, many of which might now qualify under these non-security guidelines. Expert analysis from blockchain policy forums indicates this could reduce compliance burdens for developers, potentially increasing ICO activity by 50% in the coming year, based on historical trends adjusted for current market conditions.

Frequently Asked Questions

What Are the Implications of SEC Chair Paul Atkins’ Views on ICOs Not Securities for Crypto Startups?

SEC Chair Paul Atkins’ stance means crypto startups issuing network tokens, digital collectibles, or digital tools via ICOs can operate without SEC securities registration. This reduces legal risks and costs, encouraging innovation. Startups should still comply with CFTC guidelines and general anti-fraud laws to ensure transparent fundraising practices.

Why Are Tokenized Securities the Only ICO Type Regulated by the SEC Under Atkins’ Taxonomy?

According to Paul Atkins, tokenized securities represent existing regulated assets like stocks or bonds on blockchain, maintaining their security status. This keeps them under SEC oversight to protect investors from manipulation. In contrast, the other token types lack investment contract elements, aligning more with commodities regulated by the CFTC for fair market practices.

Key Takeaways

• Encouraging Non-Security ICOs: Atkins’ comments promote ICOs for network tokens, collectibles, and tools, excluding them from SEC rules to boost industry growth.
• Regulatory Focus on Tokenized Securities: Only representations of traditional securities will face SEC scrutiny, ensuring investor protections remain intact.
• Potential ICO Revival: With clearer guidelines, 2017-style fundraising could resurgence, advising projects to structure tokens carefully for compliance.

Conclusion

SEC Chair Paul Atkins’ delineation of ICOs not considered securities—encompassing network tokens, digital collectibles, and digital tools—marks a pivotal shift in crypto regulation. By directing these to CFTC oversight, the framework balances innovation with investor safeguards, particularly for tokenized securities. As the industry evolves in 2025, stakeholders should monitor upcoming legislation and Project Crypto initiatives for further clarity, positioning themselves to capitalize on this regulatory thaw.

In his address at the Blockchain Association’s annual policy summit, Atkins responded to queries from COINOTAG, reinforcing that ICOs transcending non-security categories would not fall under SEC jurisdiction. This perspective aligns with broader efforts to distinguish utility-driven tokens from investment vehicles. Historical context from the 2017 ICO surge, where the SEC cracked down on unregistered offerings during the Trump administration, underscores the significance of this evolution. Despite past interventions that cooled the market, Atkins’ taxonomy suggests a more permissive environment ahead.

Tokens linked to decentralized networks facilitate seamless, trustless operations, avoiding the centralized profit expectations that define securities. Digital collectibles, evoking NFT-like assets tied to cultural phenomena, emphasize ownership over yield. Digital tools, meanwhile, integrate blockchain for real-world applications, from event access to community governance. Atkins noted that Project Crypto could introduce exemptions and safe harbors, streamlining launches for compliant projects.

Industry responses highlight optimism; for instance, platforms are innovating fundraising tools, though specifics remain internal. Senator Cory Booker’s offstage concerns about potential bill derailments add nuance, yet Atkins’ direct input signals momentum. Overall, this taxonomy could redefine ICO viability, urging developers to align with non-security traits for efficient capital raises.