TLDR
- The SEC’s Division of Corporation Finance is working on a clear taxonomy to redefine crypto assets.
- Director Moloney aims to clarify when crypto assets are no longer considered investment contracts.
- The SEC is proposing to reduce the frequency of financial reporting from quarterly to semi-annually.
- The SEC’s Project Crypto seeks to provide businesses with clear guidelines on crypto asset regulations.
- The SEC is addressing a significant backlog of filings caused by the 2025 government shutdown.
- The SEC’s new approach allows tokens to shift from securities to non-securities as networks decentralize.
The SEC’s Division of Corporation Finance is working on reforms to clarify regulations surrounding crypto assets. Director Moloney aims to establish a clear framework to determine when crypto assets should no longer be considered securities. The goal is to reduce legal ambiguities for businesses and increase transparency in the market.
SEC Proposes a New Taxonomy for Crypto Assets
The SEC’s Division of Corporation Finance is taking steps to define crypto assets more clearly. Director Moloney has proposed creating a clear taxonomy to categorize these digital assets. This initiative is aimed at helping businesses understand which crypto assets qualify as investment contracts. Once a crypto asset is no longer considered an investment contract, it can be reclassified as a non-security.
The SEC’s approach suggests that a token sold initially as a security could later be redefined. The reclassification would occur when the issuer’s managerial efforts decrease or the network becomes decentralized. This reform is part of a broader effort to ease regulatory burdens for companies in the crypto sector.
The initiative is being driven by the SEC’s Project Crypto, launched by Chairman Atkins in 2025. This project seeks to provide the market with clear guidelines for navigating crypto assets under securities laws. By creating a specific framework, the SEC hopes to prevent confusion and provide businesses with the tools to comply with evolving regulations.
Director Moloney Plans to Revise Reporting Requirements
One of the SEC’s most discussed proposals involves revising corporate reporting cycles. Director Moloney has suggested reducing the frequency of financial filings from quarterly to semi-annual reporting. He explained that the current 90-day reporting cycle forces companies to prioritize short-term profits over long-term goals.
This proposal has sparked debate, with some academic groups and shareholder advocates raising concerns. They argue that less frequent reporting could lead to greater market volatility. Others worry that it may provide insiders with more opportunities to trade on non-public information.
Despite these concerns, Chairman Atkins has supported the change, believing it would encourage long-term thinking. The proposal aims to shift the focus from short-term earnings to more strategic business planning. Director Moloney has also acknowledged the potential downsides but believes the benefits outweigh the risks.
SEC Faces Challenges in Managing Backlog of Filings
Along with the reform efforts, the SEC is dealing with a backlog of filings. A government shutdown in the fall of 2025 caused delays, resulting in nearly 1,000 registration statements awaiting processing. Although processing times are improving, the division still faces challenges in clearing the backlog.
The SEC has taken steps to address this, including allowing certain offerings to become effective automatically after 20 days. However, the backlog remains a priority for the SEC to resolve. The division continues to work through these issues while ensuring that new regulations are effectively implemented.
As part of its broader reform, the SEC is also preparing for the enforcement of the Holding Foreign Insiders Accountable Act (HFIAA). This law, which mandates that foreign company insiders report their stock trades, will take effect on March 18, 2026. The SEC urges foreign directors to get their identification numbers early to avoid delays in the filing system.