SEC Excludes Stablecoins From Securities, Unveils 'Safe Harbor' Framework

SEC Chairman Paul Atkins took the stage at DC Blockchain Summit to unveil a revamped classification system for digital assets and an updated interpretation of investment contracts. The most significant development: payment stablecoins are officially excluded from securities regulation.

Four Asset Classes Outside SEC Jurisdiction

The new taxonomy identifies four categories of digital assets that the SEC does not consider securities:

• Digital commodities
• Digital collectibles
• Digital instruments
• Payment stablecoins (under the GENIUS Act)

Only one class — "digital securities" — falls under the agency's existing regulatory framework. This category is limited to tokenized versions of traditional financial instruments. Atkins stated the agency intends to eliminate the regulatory ambiguity that has plagued the industry for years.

Regulation Crypto Assets: Three Capital Formation Mechanisms

Beyond the taxonomy, Atkins announced that the SEC is developing a new rulebook called Regulation Crypto Assets, designed to create transparent and legal pathways for capital raising. The proposal, expected to be reviewed in the coming weeks, includes three core mechanisms:

Startup exemption. A temporary measure lasting up to four years for early-stage projects. Developers can raise up to $5 million with basic disclosure requirements — similar to a white paper.

Fundraising exemption. Allows projects to raise up to $75 million per year. Issuers must disclose their financial condition and provide reporting.

"Safe harbor" for investment contracts. An asset ceases to be classified as part of an investment contract once the issuer fulfills initial obligations and transfers control to the community — effectively achieving decentralization.

Atkins credited Commissioner Hester Peirce, who first proposed the Token Safe Harbor concept back in 2020, as the intellectual foundation for the initiative. The rules will also align with bipartisan congressional legislation and provisions of the Clarity Act. The SEC and CFTC plan to collaborate on implementing these standards.

Why This Matters

The SEC's new taxonomy fundamentally reshapes the legal landscape for crypto in the United States. For years, market participants operated under legal uncertainty, with the regulator applying the Howey test broadly across various token types — leading to lawsuits and driving projects to other jurisdictions. A clear categorization system with defined criteria provides the industry with legal certainty and opens legitimate capital formation pathways within the US.

The Flip Side: Deregulation Kills Demand for Decentralization

The softening regulatory environment has produced an unexpected consequence. Tally, a DAO governance platform that operated for six years and served over 500 organizations — including Uniswap, Arbitrum, and ENS — announced it is shutting down.

"This is the end folks." — Dennison (@DennisonBertram), original post

Tally CEO Dennison Bertram told CoinDesk that the decision was driven by the shift in US regulatory policy. Under former SEC Chair Gary Gensler's aggressive enforcement approach, projects were compelled to adopt decentralized governance structures to avoid having their tokens classified as securities. Tally's tools served as a critical part of that legal defense strategy.

With the arrival of a more permissive administration, regulatory pressure eased — and demand for complex on-chain governance tools declined with it. Bertram noted that the Trump administration effectively signals to projects: "you don't have a problem, do whatever you want." This grants enormous freedom but raises the question of whether decentralization is even necessary anymore.

Other market participants echo this trend. Across Protocol co-founder Hart Lambur proposed dissolving its DAO. Exchange Jupiter and Yuga Labs have also moved away from decentralized structures.

An additional factor behind Tally's closure was the failed hypothesis of an "infinite garden" of L2 networks. The company anticipated thousands of new blockchains emerging, but the market consolidated around a handful of major players. Bertram also pointed to an exodus of specialized talent toward the artificial intelligence sector.

Earlier in January, the SEC had already clarified that tokenized securities fall entirely under existing federal securities law governing traditional instruments.