Understanding the SEC, from "Project Crypto" to "Peanut Butter and Watermelon"
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Understanding the SEC, from "Project Crypto" to "Peanut Butter and Watermelon"
America's appeal will stem simultaneously from "better market structure" and "higher rights standards."
Navigating Web3 tides with focused insightsAuthor: Charlie Liu
Two speeches, five days apart, yet together they set the stage for U.S. crypto finance.
On July 31, SEC Chair Paul S. Atkins announced "Project Crypto," placing "onboarding U.S. capital markets onto blockchain" on the regulatory agenda.
On August 4, Commissioner Hester M. Peirce addressed financial privacy and regulatory philosophy at UC Berkeley's "Peanut Butter & Watermelon" event.
Viewed together, these speeches reveal that the U.S. is not only enhancing market attractiveness through "clearer rules," but also reshaping talent appeal through a "deeper rights-based framework."
Two Speeches
Atkins' "Project Crypto" is a declaration of "market-structure-level" transformation.
He traces the historical arc from the NYSE’s Buttonwood Agreement to the emergence of ATS (Alternative Trading Systems), culminating in today’s imperative: bringing U.S. asset issuance, custody, and trading fully on-chain.
Its three key points are:
First, resolving the long-standing "is it a security?" question with clear, implementable standards, and establishing distinct pathways for different token types (digital commodities, stablecoins, revenue-distributing security tokens, etc.).
Second, modernizing custody regulations while explicitly affirming "self-custody as a core American value," and incorporating staking and other on-chain activities into compliant investment practices.
Third, proposing a "super-app" regulatory vision—a single regulated platform capable of handling both securities and non-securities digital assets, reducing market inefficiencies caused by fragmented oversight.
The entire speech repeatedly emphasizes "bringing back offshore businesses and teams," linking Project Crypto with the Presidential Working Group (PWG) and recent federal stablecoin legislation.
Peirce’s "Peanut Butter & Watermelon," in contrast, is a "social-contract-level" redefinition of financial privacy in the digital age.
Starting from the third-party doctrine and BSA/AML reporting practices, she identifies a critical fallacy: directly transplanting large-scale banking surveillance onto peer-to-peer crypto networks.
If technology removes intermediaries, rights boundaries must evolve accordingly; otherwise, a "report whenever possible" compliance mentality emerges—costlier and not necessarily more effective.
She cites numerous legal precedents and data to argue for redrawing privacy and regulatory boundaries in digital environments, opposing the default inclusion of ordinary users and developers in surveillance frameworks.
She does not deny the need to combat crime, but stresses proportionality, precision enforcement, and defends the legitimacy of privacy-enhancing technologies.
Profiles
Atkins’ professional identity is that of a "market structure engineer."
He served as an SEC commissioner from 2002–2008, non-executive chairman of BATS Global Markets from 2012–2015, and founded and ran Patomak, a compliance and market structure consultancy, until his appointment as the 34th SEC Chair in April 2025.
His public record reveals a strong focus on "promoting competition" and "reducing unnecessary regulatory overlap," which explains why "Project Crypto" resembles a blueprint aligning exchanges, brokers, clearinghouses, custodians, and on-chain settlement.
Peirce is known as "Crypto Mom," but her deeper strength lies in her dual perspective from within and outside institutions.
Appointed SEC commissioner in 2018, she previously researched at Mercatus Center, served as senior counsel at the Senate Banking Committee, worked as a lawyer in the SEC’s Division of Investment Management, and was Atkins’ legal advisor.
This background enables her to navigate legislative and enforcement boundaries while finding grounding for "updating legal principles, not just rules" within technological and rights frameworks.
These experiences—and Atkins’ trust—have led to her current role leading the SEC’s Crypto Task Force.
Capital and Talent
If U.S. competitiveness is split into two curves—capital market attractiveness and talent appeal—these two speeches each pull one curve, intersecting to create synergy.
Atkins concretizes "capital market attractiveness" through: certainty in token classification, coexistence of custodial and self-custody models, unified and cross-category trading venues, and compliance for on-chain settlement.
These directly improve efficiency across "issuance–trading–clearing–custody," unlocking liquidity for dollar-denominated on-chain assets.
Peirce grounds "talent appeal" in first principles: financial privacy is a citizen right that should not be "default surrendered" due to technological change.
Regulation must be auditable and accountable, but not at the cost of universal freedoms.
In short, one makes the rails usable; the other makes people want to get on them.
Global Regulatory Comparison
Today’s international competition is no longer about "whether there is regulation," but whose regulation functions more like a "computable, composable" operating system.
Europe’s MiCA implemented ART and EMT stablecoin rules in 2024, standardizing requirements from whitepaper obligations, capital and reserves, disclosure, to redemption timelines, enabling cross-border "passporting." This system excels at "licensing for certainty," but still defines DeFi-native interactions primarily through service providers.
The UAE’s dual-track approach—Dubai VARA’s Virtual Asset and Related Activities Regulations (2023) and Abu Dhabi ADGM’s FRT (Fiat-Referenced Token) framework—is known for its "high transparency + rapid iteration" regulatory handbooks, offering "checklist-based licensing" for exchanges, custody, and issuance. Its hallmark is "building the business pipeline first," then fine-tuning via updated guidance.
Hong Kong’s Stablecoin Ordinance, effective August 1, 2025, brings "fiat-pegged stablecoin issuance" under licensed activities, with HKMA leading rulemaking and licensing, forming a top-down path of "stablecoins first, broader token markets later." Its strengths lie in clear legal hierarchy and a well-defined lead regulator, though ecosystem openness to pure public-chain native applications and cross-border coordination remains to be seen.
Singapore’s MAS finalized its stablecoin framework in 2023, requiring "100% high-quality reserves, five-day redemption, independent audits, capital constraints, and compliance labels." Japan’s 2023 amendment to the Payment Services Act classifies "yen-denominated stablecoins" as "currency-denominated assets," restricting issuance to "banks, trusts, and money transfer operators." South Korea’s draft Digital Asset Basic Act emphasizes "bankruptcy remoteness," reserve custody, and audits.
A common thread among them is using payment stablecoins as an entry point—first making money programmable, then layering on tokenized securities and real-world assets.
The U.S. "first principles" narrative has two layers.
The first is at the level of "money": Trump’s July 18 signing of the GENIUS Act established a "federal foundation" for payment stablecoins, mandating 1:1 high-liquidity reserves, regular disclosures, and "super-priority" protections for holders in bankruptcy. For the first time, it unifies the framework around "programmable dollars," covering payment clearing, fund safeguarding, and issuing entities (banks/federally regulated non-banks).
The second is at the level of "rights": Peirce does not simply advocate "lighter regulation," but critically examines the real-world impact of the third-party doctrine and BSA, advocating for "proportionality + precise enforcement" over "broad, blanket surveillance"—a return to recognizing privacy as a fundamental human right.
Compared to Europe’s "license-centric," the Middle East’s "business checklist-centric," and Asia’s "payment-first" approaches, the U.S. is attempting to place both "rights and market structure" at the institutional starting line—a foundation that uniquely inspires long-term confidence among developers and entrepreneurs.
Outbound Strategy
Based on fifteen years of experience founding and operating in global fintech and financial sectors, here are some strategic suggestions for Chinese capital and Web3/RWA enterprises:
First, stratify strategic positioning.
In the short term, adopt a "rural encirclement of the city" approach, using Hong Kong, Singapore, UAE, and Europe as testing grounds for growth and compliance. But in the medium to long term, the U.S. must be central—and preparation should begin now.
The U.S. is simultaneously the source of profit pools, valuation benchmarks, and discourse power; exclusion means long-term discounting.
The barrier to entry isn’t just cost, but respect for first principles: products must be inherently "privacy-friendly," and compliance must be "auditable and accountable."
Second, balance product development and licensing.
With the GENIUS Act establishing a federal framework for payment stablecoins, USD-denominated on-chain cash and short-term debt funds will become standard for B2B, cross-border settlements, and on-chain finance.
For companies focused on stablecoins, RWA, or brokerage infrastructure, prioritize making reserve composition, redemption mechanisms, independent audits, and bankruptcy isolation "U.S.-ready." Simultaneously, use jurisdictions like Singapore, UAE, and Europe to test operations and risk controls with real capital and real clients, building internal documentation and audit trails into "compliance assets" ahead of time.
Third, adopt American-style channel and ecosystem integration.
Atkins’ "super-app" direction suggests the U.S. may allow more "unified licensed stacks," creating new interface demands for collaboration among trading, market-making, brokerages, advisors, synthetic assets, and custody.
A pragmatic approach is to establish early ecosystem partnerships with the U.S. financial system—on compliance whitelists, clearing integration, and on-chain settlement pilots—positioning your firm as a "plug-and-play" node rather than a vertically integrated, capital-intensive player.
Fourth, localize narrative and team-building.
Peirce’s speech signals a shift in U.S. regulation toward a "scientific, quantitative and proportional" understanding of the privacy-compliance-efficiency triangle.
Your risk, data engineering, and legal teams must be able to demonstrate value under the logic of "minimizing unnecessary reporting while preserving effective audits." Your core engineers must also embrace a culture of "embedding rights into products"—precisely what attracts top-tier U.S. talent.
More importantly, your business and operations teams must deeply understand local narratives and commercial culture, translating regulatory language into business terms, and technical advantages into customer value, building long-term trust across industry associations, state and federal regulators, and institutional compliance and procurement channels.
Conclusion
U.S. attractiveness will stem from both "superior market structure" and "higher rights standards."
Reading Atkins’ "Project Crypto" alongside Peirce’s "Peanut Butter & Watermelon" reveals a U.S. appealing to both capital and talent:
The former uses institutional certainty and market engineering to draw back liquidity and issuance; the latter, through principled defense of privacy and freedom, encourages developers, users, and brands to set their "default market" here.
For Chinese enterprises and capital, even if the U.S. is not the immediate "only battlefield," it is certainly the long-term "high ground" that must be secured.
Refine compliance and tech stacks in neighboring markets for seamless U.S. migration, then enter strategically—fully integrating Web3 with Web2 finance in this place where "narrative and institutions resonate." This is the right way to endure cycles and capture the dividends of dollar asset digitization.
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@charliecliu
