- SEC Chair Paul Atkins announced “Project Crypto” to update decades-old securities rules for the digital asset market.
- Custody reforms will require stronger safeguards, including blockchain monitoring and real-time auditing for crypto asset holders.
- The initiative aims to expand crypto integration into retirement funds while awaiting broader legislative action from Congress.
SEC Chair Paul Atkins outlined a sweeping regulatory modernization effort on Fox Business, introducing “Project Crypto” as a central initiative to update decades-old securities rules for the digital asset era. Speaking on Mornings With Maria on August 15, Atkins said the Commission is mobilizing all divisions to implement recommendations from the President’s Working Group on Digital Assets.
The program targets outdated frameworks that govern asset custody and securities handling. Atkins emphasized the need for secure crypto storage, warning against lax practices such as keeping private keys on unsecured devices. He said the SEC will move quickly within its current authority while awaiting legislative action from Congress.
The initiative responds to structural gaps in existing financial regulations, many of which predate digital assets by nearly a century. Atkins noted that custody rules designed for paper certificates and traditional broker-dealers cannot address the technical realities of blockchain-based holdings.
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Custody and Compliance at the Core
A central focus of Project Crypto is modernizing custody requirements for digital assets. Atkins described the existing standards as “90-year-old rules” that no longer reflect market infrastructure. The SEC aims to ensure that custodians maintain robust, verifiable safeguards for client assets.
Under the proposed updates, qualified custodians would need to meet higher technical and operational thresholds. These could include multi-layered access controls, blockchain transaction monitoring, and real-time auditing capabilities. Atkins said the agency will work with market participants to refine these standards without compromising investor protections.
He also highlighted the Commission’s intent to clarify how existing securities laws apply to tokenized instruments, decentralized platforms, and hybrid financial products. By providing clearer guidance, the SEC aims to reduce compliance uncertainty and create a more predictable regulatory environment.
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Broad Scope Beyond Custody
Project Crypto extends beyond custody reform. The SEC will assess how digital assets can be integrated into retirement accounts, mutual funds, and other regulated investment products. Atkins said these steps would require careful consideration of risk management frameworks, disclosure requirements, and operational resilience.
The plan also addresses the balance between fostering innovation and maintaining market integrity. While legislation remains necessary for comprehensive policy changes, Atkins stressed that the SEC has the authority to act now on several fronts.
Industry reaction to the announcement has been measured, with stakeholders awaiting formal rulemaking proposals. The initiative’s scope suggests a multi-year effort that could reshape the U.S. regulatory landscape for digital assets, potentially influencing global approaches to crypto oversight.
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