SEC's New Chair Paul Atkins: Building a New Regulatory Framework for On-Chain Securities to Position the U.S. as a Global Crypto Asset Hub
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SEC's New Chair Paul Atkins: Building a New Regulatory Framework for On-Chain Securities to Position the U.S. as a Global Crypto Asset Hub
Paul Atkins, who officially assumed the role of SEC Chair on April 22, attended a roundtable and delivered his first extended speech on cryptocurrency as SEC Chair.
Navigating Web3 tides with focused insightsSource: SEC
Translation: Azuma, Odaily Star Daily
Editor's note: On May 12, local U.S. time, the Securities and Exchange Commission's (SEC) Crypto Assets Task Force convened its fourth cryptocurrency roundtable meeting, themed "Tokenization: Onboarding Assets — The Intersection of Traditional Finance and Decentralized Finance."
Notably, Paul Atkins, who officially assumed office as SEC Chair on April 22, attended the roundtable and delivered a comprehensive speech on cryptocurrencies in his new role—the first such extensive address since his appointment (Note: During the third meeting, Paul Atkins had given brief opening remarks just four days after taking office).
In his speech, Paul Atkins stated that "securities are increasingly migrating from traditional (off-chain) databases to blockchain-based (on-chain) ledger systems." He emphasized that establishing a sensible regulatory framework for crypto assets during his tenure will be a core priority, aiming to create clear rules for the issuance, custody, and trading of digital assets while continuing to curb illegal activities. Additionally, SEC’s regulation of crypto assets will no longer rely heavily on controversial enforcement actions but instead utilize existing rulemaking authority, interpretive powers, and exemption rights to set precise and applicable standards for market participants.
Full text of Paul Atkins' speech:
Thank you all, good afternoon. I am honored to speak before this distinguished group at today’s roundtable on tokenization. Thank you to each of the panelists for your participation.
The topic we’re discussing this afternoon is timely—securities are increasingly migrating from traditional (or “off-chain”) databases to blockchain-based (or “on-chain”) ledger systems.
This migration from off-chain to on-chain systems is akin to the evolution of audio recordings decades ago—from vinyl records to cassette tapes and eventually to digital software. Encoding audio into digital file formats that could be easily transmitted, modified, and stored unlocked immense innovation potential for the music industry. Audio broke free from static, fixed formats and suddenly became compatible and interoperable across multiple devices and applications. It could be combined, split, and programmed to create entirely new products. This also gave rise to new hardware and streaming business models, greatly benefiting consumers and the U.S. economy.
Just as the digital audio revolution transformed the music industry, on-chain securities have the potential to reshape securities markets through novel methods of issuance, trading, holding, and utilization. For example, on-chain securities can use smart contracts to transparently distribute dividends to shareholders automatically; tokenization can also convert relatively illiquid assets into liquid investment opportunities, promoting capital formation. Blockchain technology holds promise for enabling numerous innovative applications for securities, fostering new types of market activity not yet covered by current SEC regulations.
To fulfill President Trump’s vision of making America the global center for crypto assets, the SEC must keep pace with innovation and assess whether our existing regulatory framework needs adjustments to accommodate on-chain securities and other crypto assets. Regulations designed for off-chain securities may be incompatible with—or unnecessarily restrictive toward—on-chain assets, potentially stifling the development of blockchain technology.
A core priority during my tenure will be establishing a sensible regulatory framework for crypto assets, setting clear rules for issuance, custody, and trading, while continuing to combat unlawful conduct. Clear rules are essential to protect investors from fraud—especially helping them identify scams involving violations of law.
The SEC has entered a new era. Policy will no longer be shaped primarily through ad hoc enforcement actions but through the use of existing rulemaking, interpretive, and exemption authorities to establish precise and applicable standards for market participants. Enforcement efforts will return to their congressional mandate—focusing on prosecuting breaches of legal duties, particularly those involving fraud and market manipulation.
This work requires collaboration across multiple divisions within the SEC, so I am pleased that Commissioners Uyeda and Peirce have jointly established the Crypto Assets Task Force. For too long, the SEC has suffered from policy silos. This task force demonstrates how we can break down departmental barriers and deliver the clarity and certainty the public has long awaited.
Next, I will outline three key areas of focus for crypto asset policy—issuance, custody, and trading.
Issuance
First, I will push the SEC to develop clear and reasonable guidance for the issuance of crypto assets that qualify as securities or investment contracts. To date, only four crypto asset issuers have successfully raised funds through registered offerings or exemptions under Regulation A. Issuers often avoid these pathways, partly because it is difficult to meet the associated disclosure requirements. If an issuer does not intend to issue conventional securities like stocks, bonds, or notes, it may also struggle to determine whether its crypto asset constitutes a “security” or falls under investment contract regulations.
In recent years, the SEC first adopted what I call an “ostrich approach”—hoping crypto assets would simply disappear. Then it shifted to a “shoot first, ask questions later” enforcement model. While they claimed openness to dialogue (“come in and talk to us”), this proved at best fleeting and often misleading—because the SEC failed to adapt registration forms to new technologies. For instance, Form S-1 still requires detailed disclosures about executive compensation and use of proceeds, information that may be neither relevant nor material to crypto asset investment decisions. Although the SEC previously tailored registration forms for asset-backed securities and real estate investment trusts, it has not taken similar steps for crypto assets, which are of growing interest to investors. We cannot encourage innovation by forcing square pegs into round holes.
I am committed to advancing new approaches at the SEC. Recently, staff released a statement clarifying that certain registration filings and disclosure obligations do not apply where specific crypto asset offerings fall outside federal securities laws. I expect staff to continue issuing such clarifications, per my direction, regarding other types of offerings and assets. However, existing registration exemptions and safe harbor rules may not fully suit certain crypto asset issuances. I view reliance on staff statements as highly temporary—I believe formal action by the Commission is critical and necessary. I have directed staff to evaluate whether additional guidance, registration exemptions, or safe harbors are needed to open new pathways for crypto asset issuance in the United States. I believe the SEC has ample discretion under securities law to embrace the crypto industry, and I will ensure progress is made.
Custody
Second, I support giving registered entities greater flexibility in choosing how to custody crypto assets. Staff recently removed a significant barrier to offering crypto custody services by rescinding Staff Accounting Bulletin No. 121 (SAB-121). That bulletin was a serious misstep—staff lacked authority to substitute Commission action with such broad effect without going through notice-and-comment rulemaking. It caused unnecessary confusion and extended well beyond the SEC’s proper jurisdiction. But beyond repealing SAB-121, we can take further steps to promote competition in compliant custody markets.
We need clear standards defining a “qualified custodian” under the Investment Advisers Act and the Investment Company Act, along with reasonable exemptions for common practices in the crypto asset market. Many advisors and funds employ self-custody solutions that use more advanced technology than some commercial custodians, offering superior asset protection. Custody rules may therefore need updating to permit self-custody by advisors and funds in certain circumstances.
Additionally, we may need to eliminate the current “special purpose broker” framework and establish a more sensible regime. Only two special purpose brokers currently operate, clearly due to the significant constraints imposed by this model. Brokers have never been prohibited from custodying non-security crypto assets or security-related crypto assets, but SEC action may be needed to clarify how customer protection rules and net capital requirements apply to such activities.
Trading
Furthermore, I support allowing registered entities to offer a broader range of products on their platforms in response to market demand—services previously prohibited by past SEC leadership. For example, some brokers have sought to launch “super apps” integrating securities, non-securities, and other financial services. Current securities laws do not prohibit registered brokers operating alternative trading systems (ATS) from offering non-security trading services, including “paired trades” between securities and non-securities. I have asked staff to study how ATS regulations can be modernized to better accommodate crypto assets and to assess whether further guidance or rules are needed to support the listing and trading of crypto assets on national securities exchanges.
As the SEC builds a comprehensive regulatory framework, we should not force securities market participants to go overseas to pursue blockchain innovation. I will explore whether conditional exemptions could be granted to both registered and unregistered entities attempting to launch innovative new products and services—innovations that may not fully align with current regulatory requirements.
I look forward to working with my colleagues in the Trump administration and Congress to make the United States the best place in the world to participate in the global crypto asset market.
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