SEC Chairman Advocates for Comprehensive Reform of U.S. Encryption Asset Policy

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

On May 12, Atkins articulated this position during a keynote speech at the latest roundtable meeting of the SEC's Special Working Group on encryption assets. The meeting primarily discussed tokenization and its potential to enhance the efficiency of capital markets.

Atkins compares the transformation of blockchain-based securities to the digital revolution in the music industry, arguing that "on-chain" assets could fundamentally change the operation of capital markets just as MP3s reshaped audio distribution.

Under Atkins' leadership, the SEC's primary task is to tailor a "reasonable regulatory framework" for the digital asset market, moving away from the unpredictable enforcement patterns of the past few years that have hindered industry innovation.

He promised that future policy-making would be conducted through formal channels rather than taking ad hoc actions, and he reiterated his recent relevant statements.

Atkins stated: "The SEC is entering a new phase of development."

Comprehensive Reform Plan

Atkins has set forth an ambitious reform agenda focusing on promoting compliant encryption 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a few projects have successfully registered their issuance products through the traditional SEC route, and noted that outdated disclosure forms and legal uncertainties are the main obstacles.

To address this issue, regulatory authorities will consider developing more suitable exemption provisions, safe harbor rules, and disclosure guidelines for digital native assets. He emphasized that the temporary employee guidelines are only provisional and that a complete set of rules needs to be established by the committee to create lasting standards.

In terms of custody, Atkins supports the abolition of the "Employee Accounting Bulletin No. 121," which previously imposed restrictive measures on the holding of encryption 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 in the industry.

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

Consolidating the United States' Leadership in the encryption Field

Atkins echoed Trump's call to make the U.S. the "global encryption capital" and warned that if the SEC cannot adapt to the changing landscape, innovation will flow overseas.

He praised the co-leaders of the newly established encryption asset special working group, Mark Uyeda and Commissioner Hester Peirce, which 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 highlighted that combating fraud remains a top priority, but the SEC's enforcement approach will return to its "original intent," which is to regulate violations of clearly defined obligations rather than using enforcement to create policy.

The SEC is expected to continue advancing additional rule-making, staff guidance, and inter-agency coordination in the coming months, aiming to position the United States as a leader in the tokenized financial infrastructure space. This series of initiatives is designed to create a clearer and more predictable regulatory environment for the encryption asset industry, while also laying the groundwork for the United States to maintain a competitive edge in the global encryption economy.