SEC Chairman Advocates Comprehensive Modernization of Crypto Asset Policies

SEC Chairman Paul Atkins recently called for a comprehensive modernization of U.S. crypto asset policy and proposed a three-part strategy for reforming the regulation of issuance, custody, and trading.

On May 12, during the latest roundtable meeting of the SEC's Crypto Assets Special Working Group, Atkins delivered a keynote speech. The theme of the meeting was to explore the potential of tokenization and its ability to enhance the efficiency of capital markets.

Atkins likens the transformation of securities based on blockchain to the digital revolution in the music industry. He believes that "on-chain" assets could fundamentally change the operation of capital markets in the same way that MP3s reshaped audio distribution.

Under Atkins' leadership, the SEC's top priority is to tailor a "reasonable regulatory framework" for the digital asset market. This initiative aims to break away from the unpredictable enforcement patterns of the past few years, which have consistently hindered innovation in the industry.

Atkins pledged that future policy-making will be conducted through formal channels rather than taking ad-hoc actions. He reiterated his recent stance, stating: "The SEC has entered a new phase."

Three-pronged Reform Plan

Atkins has set out an ambitious reform agenda focusing on three areas: promoting compliant Crypto asset issuance, expanding legitimate custody options, and modernizing the trading framework.

He pointed out that currently only a few projects have successfully registered their issuance products through the traditional route of the SEC. The main obstacles are outdated disclosure forms and legal uncertainty.

To address this issue, regulators will consider developing more suitable exemption provisions, safe harbor rules, and disclosure guidelines for digital native assets. Atkins emphasized that the temporary employee guidelines are just a stopgap measure and that ultimately, a complete set of rules needs to be established by the committee to create lasting standards.

Regarding custody, Atkins supports the repeal of Employee Accounting Bulletin No. 121, which previously imposed restrictive measures on the holding of crypto assets. He calls for a broader clarification of the qualifications for "qualified custodians" and states that custody rules should evolve to reflect self-custody solutions and emerging best practices within the industry.

In terms of trading, Atkins stated support for allowing broker-dealers to provide comprehensive services on a unified platform that includes both Crypto and non-Crypto assets. He also suggested the possibility of conditional exemption relief to allow the launch of new products that may not yet comply with existing rules.

Consolidating America's Leadership in the Crypto Space

Atkins echoed Trump's call to make America the "global crypto capital" and warned that if the SEC cannot adapt to the evolving landscape, innovation will move overseas.

He praised the co-chairs of the newly established Crypto Assets Special Working Group, Mark Uyeda and Commissioner Hester Peirce. The working group aims to break down internal barriers and accelerate the issuance of guidance documents throughout the agency.

In his speech, Atkins emphasized the necessity of establishing rules that can both protect investors and support innovation. He stated that combating fraud remains a top priority, but the SEC's enforcement approach will return to its "original intention," which is to regulate violations of defined obligations rather than to create policy through enforcement.

The SEC is expected to continue advancing additional rule-making, staff guidance, and inter-agency coordination in the coming months, aiming to establish the United States as a leader in the tokenized financial infrastructure sector. This series of initiatives demonstrates the SEC's commitment to adapting to the rapidly evolving Crypto industry, while also reflecting the efforts of regulators to balance innovation with investor protection.