'Project Crypto': The SEC’s Surprising Bet on Blockchain

boomersaraga
Jul 31
4 min read

Updated: Aug 1

Disclaimer: Any views expressed in this blog are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions. The author of this content may hold personal investments in the assets, securities, or instruments mentioned within this material. This ownership could potentially create a conflict of interest, as the author's opinions may be influenced by their investment position. Readers should not interpret this information as financial advice and are encouraged to conduct their own research. Investing in cryptocurrencies involves significant risk and may not be suitable for all investors. The value of cryptocurrencies is highly volatile and can fluctuate widely in response to market dynamics, regulatory actions, technological developments, and other external factors.

Introduction

Over my eight years in the space and three plus years as a crypto investment manager, the most popular concern I hear from traditional investors is regulatory risk.

"But Boomer, what if the U.S. decides to make crypto illegal?"

I don’t have enough hands to count the number of times I’ve been asked that.

Although overblown and often impractical, this concern was fair, and at times a legitimate risk, especially in crypto's earlier years.

But fast forward to today, and the tides have turned. Under the leadership of a vastly different administration, the Securities and Exchange Commission just dropped the hammer to establish a new playing field. Crypto is here to stay in the United States.

Welcome to Project Crypto.

What is Project Crypto?

Project Crypto is a new SEC-wide initiative "to modernize the securities rules and regulations to enable America's financial markets move on-chain."

Yes, you heard that right: the Securities and Exchange Commission wants to bring the traditional investment universe onto blockchain, with a focus on using decentralized systems when an intermediary is no longer necessary.

"Decentralized finance and other forms of on-chain software systems will be part of our securities markets and not drowned out by duplicative or unnecessary regulation."

Commissioner Paul Atkins highlights that a space will be created for various types of blockchains, both decentralized, like Ethereum and Solana, and intermediary-operated, like R3’s Corda.

How Would that Work?

Quick Note: Blockchains are nothing more than distributed databases or ledgers that are shared across multiple locations in real time, rather than a single central server.

Back in the 1960's, clearing and settlement meant stacks of paper stock certificates, shuffled by clerks walking down the halls of Wall Street offices.

Today, we've digitized that system. Trades on the New York Stock Exchange are now settled and recorded through the Depository Trust & Clearing Corporation (DTCC).

But even with modern technology, settlement still takes T + 1, the trade date plus one business day.

Blockchains, however, offer real-time clearing and settlement. This could reduce the need for intermediaries like the DTCC, or at least optimize their infrastructure, allowing public securities to execute, settle, and record in seconds.

We can seamlessly tokenize stocks as digital representations of real-world equities on-chain and allow them to be traded using smart contracts, without traditional intermediaries.

In fact, we're already seeing early iterations of this.

Figure A below shows synthetic tokenized stocks on the Solana blockchain that trade at prices close to their real-world counterparts. These are early examples of what's possible when traditional assets move onto blockchain rails.

Figure A - Tokenized Synthetic Stocks on Solana

Key Takeaways from Project Crypto

Crypto and Stocks Side by Side (The Super-App Vision)

Today, regulated broker-dealers ("BD") face significant limitations when it comes to offering both securities and non-securities (such as crypto) under one roof.

Broker-dealer licenses are for securities only under SEC and FINRA rules, so offering crypto alongside equities would typically require state money transmitter licenses.

That's why we don't have "super-apps" yet in the U.S., a single platform offering stocks, crypto, staking, lending and more. The closest iteration is Robinhood, which was forced to register separately in dozens of states and create seperate legal and regulatory entities for its various lines of business.

But Commissioner Atkins wants to change that. He envisions a future where licensed trading venues can offer it all side by side under a unified framework, calling it a Regulated "Super-App."

Proper Classifications

Commissioner Atkins didn't mince his words:

"Despite what the SEC has said in the past, most crypto assets are not securities."

And for those that are? The Commission plans to implement exemptions and safe harbors to bring them into compliance without crushing innovation.

Clear rules are needed to distinguish between:

A digital collectible, like NBA Top Shot
A native blockchain cryptocurrency, like Bitcoin
A tokenized equity, like NVIDIA

And rumor has it that Wall Street firms are lined up, ready to tokenize assets the moment the rules are clear.

Choice to Custody

Custody is also a critical part of the discussion. At Khelp, we use regulated qualified custodians like Anchorage Digital and Gemini for two main reasons:

Traditional investors aren't typically equipped to self-custody
It's a current regulatory requirement

Most horror stories in crypto stem from manual user errors, sending assets to the wrong address or losing private keys. Using trusted custodians has safeguarded 100% of Khelp clients since our founding in 2022.

But for more experienced investors who want direct control of their assets on-chain? Commissioner Atkins believes they should absolutely have that liberty.

Final Thoughts

Regulatory risk has always been crypto’s elephant in the room.

But for the first time, the SEC is signaling a genuine willingness to evolve.

Rather than shut crypto out, they’re inviting it in, not just as a sideshow, but as a core part of America’s capital markets.

The blockchain era has officially begun.

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Boomer Saraga | Crypto Investment Manager

Closing Disclaimer: This blog is for informational purposes only. While the information provided herein is believed to be accurate and reliable, none of Khelp, or any of their respective affiliates or representatives or any other person makes any representations or warranties, express or implied, as to the accuracy or completeness of such information.