The Securities and Exchange Commission made its biggest pro-crypto move yet this week. On Thursday, SEC Chairman Paul Atkins launched \u201cProject Crypto,\u201d an overarching roadmap of the Commission\u2019s approach to regulating cryptocurrency.<\/p>\n
The aim of the project, according to Atkins<\/a>, is to make the United States \u201cthe crypto capital of the world\u201d by onshoring crypto asset distributions.<\/p>\n Atkins hopes to do so by updating the Commission\u2019s rules and regulations regarding on-chain software systems, encouraging experimentation with new technology like \u201ctokenization,\u201d and opening the door to the reclassification of most crypto assets as an investment contract rather than a security. The plan also aims to encourage decentralized finance initiatives that operate without intermediaries and \u201csuper apps\u201d that integrate payment ability with other functions like social media (one example being Elon Musk\u2019s vision<\/a> to transform X into an \u201ceverything app\u201d).<\/p>\n It\u2019s a huge departure from the SEC\u2019s previous approach to crypto under former chairman Gary Gensler, who became crypto industry\u2019s public enemy number one due to his strict regulatory approach.<\/p>\n Atkins made sure to hammer that point in.<\/p>\n \u201cIt\u2019s a new day at the SEC and we are picking up the gauntlet and the challenge that President Trump has laid down,\u201d he told CNBC<\/a> on Friday.<\/p>\n Trump\u2019s push for crypto legitimization <\/p>\n Gary Gensler\u2019s approach to crypto as SEC chairman was less \u201claissez-faire\u201d and more focused on compliance. In an effort to protect investors, Gensler\u2019s administration insisted that crypto tokens are overwhelmingly considered securities and are therefore covered under existing legal framework and require full disclosure and SEC registration. That made it especially rough for decentralized finance initiatives. Under Gensler, the SEC launched a wave of lawsuits against crypto exchanges like Coinbase and Binance, claiming that they operated outside the law.<\/p>\n The crypto industry deemed this to be regulatory overreach and claimed that it was pushing American crypto innovation overseas.<\/p>\n In comes Trump, who ran on a pro-crypto campaign in the 2024 presidential election even though he was once a skeptic himself, claiming that crypto was \u201ca disaster waiting to happen<\/a>\u201d back in 2021.\u00a0<\/p>\n One of Trump\u2019s first courses of action following the inauguration was to establish a federal crypto working group, chaired by the President\u2019s AI and crypto czar David Sacks. That group just released a 160-page report<\/a> on Wednesday detailing policy recommendations.<\/p>\n Trump also recently signed into law the Genius Act<\/a>, a bill that establishes the first federal regulatory framework for stablecoins, a type of cryptocurrency that is designed to have less volatility than traditional forms by pegging it to the U.S. dollar.<\/p>\n The Genius Act was a huge win<\/a> for the crypto industry, allowing banks, credit unions, and other institutions to issue stablecoins.<\/p>\n Although Atkins\u2019 SEC and the Trump administration at large are ushering in an era of cryptocurrency regulation with some consumer protections, still the roadmap for it seems to involve minimal red tape. The focus instead is overwhelmingly on legitimizing on-chain technology in the financial system.<\/p>\n And that seems to be working: A huge array of big companies are rushing to explore blockchain projects. On Thursday, J.P. Morgan announced<\/a> that it will be partnering with Coinbase to allow crypto purchases via clients\u2019 Chase credit cards, and Bank of America<\/a> CEO Brian Moynihan said earlier this month that the bank is planning on launching a stablecoin.<\/p>\n Murky waters <\/p>\n Crypto enthusiasts hype its ability to streamline financial processes by cutting out intermediaries and say that it helps give anyone across the globe access to financial accounts. They also praise the privacy and anonymity it provides.<\/p>\n But that obviously comes with downsides.<\/p>\n Critics view cryptocurrency as a threat to the financial system: the same mechanisms crypto uses to streamline and increase accessibility to financial services can also be used for money laundering, sanctions evasions, and scams<\/a>. According to the FBI, Americans have lost over $3.9 billion to about 150,000 crypto fraud schemes in 2024 alone.\u00a0<\/p>\n Crypto is also notorious for its volatility, prone to crashes, and has been mired in controversy, notably since the Sam Bankman-Fried scandal<\/a>.<\/p>\n And crypto skeptics in Congress are also pointing out that the Trump administration\u2019s regulatory push towards legitimization overlooks one glaring problem: Trump\u2019s own conflict of interest<\/a>.\u00a0<\/p>\n The Trump family runs several crypto projects, from crypto banking platform World Liberty Financial that offers a stablecoin called USD1 to an empire of memecoins<\/a> and a bitcoin mining business<\/a> co-founded by Eric Trump.<\/p>\n Not only the Trump family but his entire cabinet\u2019s burgeoning crypto empire<\/a> is viewed by many critics<\/a> as a blurring of lines between personal business interests and official policy. The regulatory actions taken so far could be seen as self-dealing.<\/p>\n