SEC Chair Atkins embraces crypto, flags prediction market risk

Nearly a year into his tenure, SEC Chair Paul Atkins is shifting the agency from an enforcement-first approach to rewriting rules for digital assets through Project Crypto, a taxonomy the agency released and a planned innovation exemption. Atkins told reporters the effort aims to open clearer pathways for crypto firms to operate in the United States and to draw some companies back from offshore jurisdictions. “So rather than fending off new, innovative types of technologies, we're embracing them,” he said.

Project Crypto is intended to update SEC rules for token offerings and related products. The taxonomy sets categories the agency will use to decide which digital assets and activities fall under securities laws. The planned innovation exemption would create a limited safe harbor or a streamlined process for certain projects to test products with reduced enforcement risk.

The approach differs from the previous SEC leadership, which pursued regulation by enforcement and brought cases that treated many tokens as securities. Several high-profile cases filed under the former chair have been dropped since Atkins took office.

Regulators are monitoring prediction markets, online platforms that allow users to place bets on events such as elections, economic releases and sports outcomes. Activity on these platforms rose after the 2024 election season. The Commodity Futures Trading Commission chair has asserted authority over some prediction-market contracts, while state officials argue that certain offerings violate local gambling laws.

Lawmakers have introduced bills to limit event contracts tied to war and to bar elected officials from betting on markets involving government policy or political outcomes, citing concerns about manipulation and insider trading. Asked about trades that precede public comments from administration officials, Atkins said, “Things like that are disturbing. I can't talk to any particular investigation, but we are examining that area.”

Atkins pointed to the digital trail left by prediction-market trades and referenced interagency work, noting coordination among the Justice Department, the CFTC and the SEC. “Let's just say that between the Department of Justice, the CFTC and us — we're focused on that,” he added.

The SEC plans to follow Project Crypto with formal rule proposals and further development of the innovation exemption. The agency intends to continue coordination with federal and state regulators on the regulatory status and risks of prediction markets and other digital-asset products.