SEC Chairman Paul Atkins proposed a four-tier token taxonomy in a speech on November 12, 2025, to clarify which digital assets qualify as securities. The framework categorizes most tokens as non-securities, aligning with recent bipartisan legislation favoring CFTC oversight. Atkins emphasized that economic reality determines regulation, not labels.
On November 12, 2025, SEC Chairman Paul Atkins delivered a speech at the Federal Reserve Bank of Philadelphia, outlining a proposed four-tier taxonomy for digital assets to resolve longstanding regulatory ambiguity in the crypto sector.
Atkins acknowledged the fatigue around the question, 'Are crypto assets securities?,' stating, 'If you are tired of hearing the question “Are crypto assets securities?,” I very much sympathize.' He criticized the prior broad approach as 'not sustainable or practicable,' noting that 'crypto asset' lacks statutory meaning under securities laws and simply describes a technological attribute.
The taxonomy divides tokens into: (1) 'digital commodities' or 'network tokens,' which are not securities if decentralized and functional; (2) 'digital collectibles,' also not securities; (3) 'digital tools,' such as functional tokens for membership, credentials, or titles, not securities; and (4) 'tokenized securities,' which remain under SEC regulation.
Atkins stressed, 'Economic reality trumps labels. Calling something a “token” or an “NFT” does not exempt it from the current securities laws if it in substance represents a claim on the profits of an enterprise and is offered with the sorts of promises based on the essential efforts of others. Conversely, the fact that a token was once a part of a capital-raising transaction does not magically convert that token into a stock of an operating company.'
This proposal mirrors a bipartisan draft bill from November 10, 2025, assigning primary jurisdiction over digital asset transactions to the CFTC, while limiting SEC's role. Atkins highlighted that investment contracts under the Howey test do not persist indefinitely, quoting Commissioner Peirce: networks mature, code is shipped, control disperses, and issuers' roles diminish, meaning most tokens now trade without reliance on managerial efforts.
The framework supports self-custody and integrated 'super-apps' for custody, trading, lending, staking, and tokenized assets, potentially reducing registration burdens and fostering clearer paths for firms and investors.