How Will the SEC’s ‘Project Crypto’ Make the U.S. the “Crypto Capital of the World”?

The days of Gary Gensler’s iron fist are far behind us. In a speech addressing the America First Policy Institute, SEC Chair Paul Atkins announced ‘Project Crypto’, a historic initiative to establish the U.S. as the “crypto capital of the world.”

Project Crypto’s scope is certainly ambitious. While specifics were scarce, Atkin’s speech hinted at concentrated efforts to move U.S. financial markets onchain, reshore crypto businesses that the previous administration pushed overseas, and outline the regulatory clarity the industry needs to flourish in the U.S.

Despite the SEC’s valiant posturing, crypto markets appear to have rejected the move, with over $400M in long positions liquidated in the past 24 hours.

SEC Reasserts Commitment to “Crypto Capital of the World”

Prior to his election, Republican candidate Donald Trump promised to make the United States the “Crypto Capital of the World”. Less than one year into his term, SEC Chair Paul Atkins has reaffirmed the administration’s commitment to this vision, announcing the launch of a commission-wide initiative the federal agency calls “Project Crypto”.

Project Crypto promises to reinvent the United States’ treatment and legislation of crypto assets. Atkins denounced the previous administration’s “head-in-the-sand posture” and “shoot first, ask questions later” approach to regulation and enforcement.

While Atkin’s address didn’t outline specific measures or policies, the SEC Chair’s speech did highlight Project Crypto’s key areas of focus. Evidently concerned with falling behind in the blockchain innovation race, Project Crypto seeks to bring crypto businesses back to the U.S.

“Project Crypto will help ensure that the United States remains the best place in the world to start a business, develop cutting-edge technologies, and participate in capital markets. We will reshore the crypto businesses that fled our country, particularly those that were crippled by the previous administration’s regulation-by-enforcement crusade and “Operation Chokepoint 2.0” - Paul Atkins, Chairman of the SEC.

Atkins spoke at length about the transformative power of tokenized onchain markets. Echoing sentiments shared by Robinhood founder Vlad Tenev, who called tokenization “the biggest innovation in capital markets in over a decade”, Atkins asserted that the SEC is exploring how it can best bring U.S. capital markets onchain.

“To achieve President Trump’s vision of making America the crypto capital of the world, the SEC must holistically consider the potential benefits and risks of moving our markets from an off-chain environment to an on-chain one… I have directed the Commission staff to update antiquated agency rules and regulations to unleash the potential of on-chain software systems in our securities markets.” - Paul Atkins, Chairman of the SEC.

Additionally, the SEC Chair envisions the creation of “superapps”, or unified platforms for both TradFi and crypto assets. Atkins argues that securities intermediaries should be able to offer an extensive range of products and services, including crypto staking and lending, “without requiring 50+ state licences or multiple federal licenses.”

While it’s unlikely that SEC staff are combing CT to gauge the sentiment and desire of crypto degens, U.S.-based airdrop farmers might even have their prayers answered. Atkins indicated that another one of Project Crypto’s goals was to propose “purpose-fit disclosures, exemptions, and safe harbors” for crypto asset events, like airdrops, ICOs, and staking rewards. 

The Federal Agency aims to establish sufficient regulatory clarity for crypto assets, in the expectation that “issuers no longer exclude Americans from their distributions to avoid legal complexity and lawsuits”.

Hester Peirce’s PWG Recommendations

On July 30th, one day prior to Paul Atkin’s address, the President’s Working Group on Digital Asset Markets published a fact sheet outlining its recommendations on how the U.S. can strengthen its presence in the blockchain world. 

Headed by SEC Commissioner Hester Peirce, the PWG has called on Congress to build on the ‘Crypto Week’s momentum. The Working Group requests that Congress enact legislation that eliminates blind spots in regulatory oversight by giving the CFTC authority to oversee spot markets for non-security digital assets. 

Peirce also advises that Congress “embrace DeFi” and explore how this technology can be integrated into “mainstream finance”.

Other requests from the PWG include modernizing bank regulation for digital assets, strengthening the role of the U.S. dollar by expediting implementation of the GENIUS Act, and clarifying the AML obligations on DeFi actors.

$400M in Long Positions Liquidated 

The SEC’s emphatic stance on crypto is a complete turnaround from the harsh and restrictive position taken by Gary Gensler and the Biden administration. Despite the bullish sentiment permeating Congress, markets appear to have rejected “Project Crypto”.

A slight $BTC retracement wrought havoc on crypto markets. According to Coinglass Data, over $500M worth of long positions were liquidated in the last 24 hours, suggesting traders may have been heavily leveraged following July 30th’s FOMC meeting.

Social media commentators wasted no time commenting on the irony of the situation. Meanwhile, prominent venture investors like Mike Dudas and Simon Dedic have called today’s markets “probably the best day to buy crypto since January 3, 2009”, arguing that “the risk-reward ratio in crypto has never been more attractive.”

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