Former SEC Commissioner: Many ICOs Are Utility Tokens, Not Securities
Former SEC Commissioner Paul Atkins told Decrypt that a substantial number of ICO tokens should not be treated as securities. Atkins argued tokens with clear utility—used to access services, represent digital collectibles, serve as payment/exchange tokens, or grant governance rights—do not meet the Howey Test’s criteria for investment contracts. He warned that applying securities law broadly risks stifling innovation and imposing heavy compliance costs on projects. Atkins suggested that some non-security tokens could fall under CFTC or other regulatory regimes instead. The article advises investors to perform rigorous due diligence (focus on token utility and working products) and project founders to design tokenomics emphasizing real utility and to seek legal counsel to reduce regulatory risk. The piece underscores continued uncertainty due to lack of clear rules and contrasts Atkins’s view with current SEC leadership, which has tended to classify many tokens as securities.
Neutral
This news is market-neutral overall. Clarifying statements from a former SEC official reduce regulatory uncertainty for utility-focused projects, which can be seen as positive for adoption and neutral-to-mildly bullish for tokens with clear utility. However, Atkins is a former commissioner and his view does not change current enforcement posture by the SEC; regulatory risk remains. Short-term market reaction is likely muted: traders typically react strongly to formal regulatory rulings, enforcement actions, or policy changes, not opinions. Over the medium to long term, increased acceptance of utility-token classifications—if reinforced by precedent or regulation—could support higher valuations and more issuance of non-security tokens, benefiting related projects. Conversely, continued SEC enforcement or court findings classifying tokens as securities would maintain downward pressure. Thus immediate impact: neutral; potential structural uplift for utility-token sectors if the view gains legal traction.