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

SEC Chairman Paul Atkins recently called for a comprehensive modernization reform of the United States encryption asset policy 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 cryptocurrency asset special working group. The meeting explored the potential of tokenization and its ability to enhance the efficiency of capital markets.

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

Under Atkins' leadership, the SEC's primary task is to tailor a "reasonable regulatory framework" for the digital asset market, breaking away from the unpredictable enforcement patterns of the past 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 out an ambitious reform agenda focused on promoting compliant encryption asset issuance, expanding legitimate custody options, and modernizing trading frameworks.

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a few projects have successfully registered their issuance products through the traditional SEC route, and stated that outdated disclosure forms and legal uncertainties are the main obstacles.

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

In terms of custody, Atkins supports the abolition of Staff Accounting Bulletin No. 121, which previously imposed restrictive measures on the holding of encryption assets. He called for a broader clarification of the qualifications for "qualified custodians" and stated that custody rules should be updated to reflect self-custody solutions and emerging best practices in the industry.

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

Consolidating America's Leadership in the encryption Field

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

He praised the co-chairs 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 across the agency.

In his speech, Atkins emphasized the necessity of establishing rules that can both protect investors and support innovation. He stressed 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 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, striving to position the United States as a leader in the tokenized financial infrastructure space.