USA’s Project Crypto: Key Takeaways & What It Means for the Rest of the World

Trump’s talk about bringing the US into the crypto game isn’t just talk anymore. After the president’s GENIUS Act, it’s time for the SEC to reaffirm the country’s position with Project Crypto, an ambitious initiative to set new rules that are pro-crypto innovation. In this article, we explore the implications of Project Crypto, its key takeaways, and what it means for the broader world.

How it began

Let’s take a step back. During the Biden era, the US was one of the strictest countries when it came to crypto regulation. Thousands of Web3 projects were sanctioned because they were allegedly operating without proper licenses.

Suddenly, under the Trump administration, the discourse around crypto shifted, and we’re now seeing a series of decisions and declarations that reaffirm the president’s official position of welcoming digital currencies with open arms. At the start of his mandate, Trump created the Crypto Task Force, a SEC department.

Things got more official with the signing of the GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins) Act, a federal law regulating the issuance and use of stablecoins. According to the document, stablecoins are essential because they are “the future of digital payments” and “will drive demand for US treasuries and ensure the US dollar remains the reserve currency of the world”. This law is also in place to protect consumers, as it ensures they are not harmed in case of a Web3 company’s bankruptcy, for example.

Project Crypto was announced at the end of July by the Securities and Exchange Commission’s (SEC) Chairman, Paul Atkins. The initiative represents a major step in modernizing crypto regulation in the US. What’s surprising is that the SEC has always been one of the strongest opponents regarding digital currencies and related projects. Under Atkins, it has now shifted drastically and is developing a series of rules and regulations that support the development of Web3 apps, crypto investment, and much more.

In early August, Trump signed an executive order to “open the $9tn US retirement market to cryptocurrency investments, private equity and other alternative investments”, writing yet another brand new chapter in the crypto history in the US. In the American system, retirement plans, like the 401(k), are a combination of private investments and public money. Millions of Americans rely on this, and Trump’s executive order now allows for these investment plans to include not only mutual, target-date, and index funds and bonds, but also crypto assets. This might make these investments high-risk, but it also allows people more latitude.

Just two days ago, Atkins and SEC Commissioner Hester Peirce also reiterated their intentions to update pro-crypto legislation after the Ripple case ended in a settlement. Ripple and its former chair, Gary Gensler, were accused by the SEC of conducting an unregistered securities offering by selling the cryptocurrency XRP.

The CLARITY (Digital Asset Market Clarity) Act, which passed in the House of Representatives this July, is heading to the Senate in September, with the Banking Committee aiming to pass legislation by September 30. This Act also clarifies who deals with what — before, there was an unofficial “war” between the SEC and the Commodity Futures Trading Commission over jurisdictional issues.

The Project’s Key Takeaways

In his speech, Atkins highlighted Project Crypto’s 5 major elements, including a clearer classification framework, more leeway for the development of new projects, privacy support, promotion of “super-apps”, and exemptions for innovation.

(1) Clearer Token Classification Framework

Not all crypto assets will be considered securities. Even the narrative of which umbrella crypto falls under has changed. According to Atkins, “despite what the SEC has said in the past, most crypto assets are not securities”, which means fear of legal persecution is no longer an issue. Over the years, several US-based companies moved their headquarters and funds to other jurisdictions to be able to operate. Others didn’t even try to enter the American market. These and new projects might now be able to try their luck in the “land of dreams and opportunity”.

The Chairman also wants to make changes to the way Americans access crypto platforms and services — a vast majority of users end up using VPNs to circumvent the current prohibitions. Atkins says that once the regulations are in effect, access will be much wider.

Sure, there will still be securities (tokens that function as investment contracts to fundraise a project for profit), but there will also be commodities (decentralized assets, like Bitcoin or Ethereum), stablecoins, collectibles & utility tokens (NFTs and other apps that aren’t necessarily related to direct investment), and hybrids (apps and tokens that have multiple uses). “Our goal is to help market participants slot crypto assets into categories, such as digital collectibles, digital commodities, or stablecoins, and assess the economic realities of a transaction. This approach can allow market participants to determine, based upon clear guidelines, whether any outstanding promises or commitments of the issuer cause the crypto asset to be subject to an investment contract.”

(2) Welcoming New Projects

The idea is to create “safe harbors” for activities like ICOs and airdrops as new companies try to introduce their new tokens and assets to the world. The US market was usually off-limits because of its strict legislation against such activities, but Atkins seems to be welcoming those to bring the populations in for these new projects: “I have asked staff to propose purpose-fit disclosures, exemptions, and safe harbors, including for so-called “initial coin offerings,” “airdrops,” and network rewards. Regarding these sorts of transactions, our goal should be that issuers no longer exclude Americans from their distributions to avoid legal complexity and lawsuits, but instead choose to include Americans to enjoy legal certainty and an accommodating regulatory environment.”

(3) Praising Privacy

While previous government figures tried to implement legislation to monitor self-custodial wallets closely (one example is the proposal that the Financial Crimes Enforcement Network did in 2020), the current administration is all in when it comes to people owning their wallets and assets. Atkins believes “deeply in the right to use a self-custodial digital wallet to maintain personal crypto assets and participate in on-chain activities like staking.”

Remember the Tornado Cash controversy? At the start of August, Wired reported that a federal jury considered co-founder Roman Storm guilty of “operating an unlicensed crypto business”. However, the sanctions violations and money laundering charges didn’t pan out. This marks a major step for everyone in the crypto and Web3 industry who values privacy.

Just a few days before Storm’s verdict, at the Science of Blockchain Conference, Peirce showed her support for privacy-preserving crypto projects: “(…) we should welcome privacy-protecting technologies and safeguard the right of individuals to self-custody their crypto assets. And developers of open-source privacy software should not have to answer for the actions that other people take using the software they wrote.”

What Peirce seems to be defending is the need for pro-privacy projects, like Integritee, that help protect people and their identities. During the launch of Project Crypto, Atkins mentioned self-custody as a form of freedom: “the right to have self-custody of one’s private property is a core American value. (…) I believe deeply in the right to use a self-custodial digital wallet to maintain personal crypto assets and participate in on-chain activities like staking.” This sounds like great news for projects dedicated to self-custody and privacy protection.

All this, however, has to be regulated, as there are always two sides to the same coin. Privacy is as important as monitoring criminal activities. Tornado Cash was used by many people who had no ill intentions, but it was also used to facilitate criminal activities, like the North Korean hacker group, Lazarus, did.

So what’s the solution? Open everything up, and leave it for everyone, good and evil, to use? Or welcome the new age of Web3 and crypto, but still regulate its use to prevent illicit activities? The European Union is strongly betting on the latter, and it might still be too early to see what the US’s new vision will look like. According to Atkins, there will still be rules in place to monitor illegal activities: “(…) some investors will continue to rely on SEC registrants, such as broker-dealers and investment advisers, to hold assets on their behalf, and these firms are subject to additional regulatory requirements when they do so”.

(4) Yes to Super-Apps

Super-Apps are mobile or web applications that combine multiple services into a single, seamless platform. It essentially acts as a one-stop shop, offering a wide range of functionalities that would traditionally require multiple separate apps.

The SEC’s Chairman wants to facilitate the implementation and use of super-apps for the users and for the developers. According to Atkins, “a broker-dealer with an alternative trading system should be able to offer trading in non-security crypto assets alongside crypto asset securities, traditional securities, and other services, like crypto asset staking and lending, without requiring fifty-plus state licenses or multiple federal licenses.”

This paves the way to a much more diversified Web3 economy, where companies like ours don’t have to ask for different licenses to allow trading, staking, and messaging services, for example. The idea is to allow a project that has just issued a token to also launch an exchange.

(5) Exemptions on Innovation

Atkins also wants to launch a temporary “innovation exemption” allowing experimental crypto products to operate for a limited time under lighter regulation if they meet baseline investor protection rules.

It will also promote full integration of tokenized assets, DeFi protocols, and on-chain recordkeeping into the regulated financial system.

This might be life-changing for projects born from startups and other companies that don’t have a powerful infrastructure, but still want to try their luck in the market.

Project Crypto keeps up with Trump’s intentions

As one can see, it is clear that the SEC, President Trump, and most members of the House of Representatives are in agreement when the debate is on crypto legislation modernization. It will be interesting to see what this administration’s next steps will be, and how its decisions will affect the crypto and Web3 industry nationwide and around the world.

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