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

SEC Chairman Paul Atkins recently called for a comprehensive modernization 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 elaborated on this viewpoint during a keynote speech at the latest roundtable meeting of the SEC's Special Working Group on encryption assets. The meeting focused on 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. He believes that "on-chain" assets could have a profound impact on capital markets, just as MP3s have fundamentally changed the way audio is distributed.

Under Atkins' leadership, the SEC's top priority is to tailor a "reasonable regulatory framework" for the digital asset market. This will eliminate the unpredictable enforcement patterns of the past few years, which have been hindering innovation.

He promised that future policy-making would be conducted through official channels rather than taking ad-hoc actions. This is consistent with his recent statements.

Atkins stated: "The SEC is entering a new situation."

Reform Plan with a Three-pronged Approach

Atkins has set out an ambitious reform agenda focused 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have successfully registered their issuance products through the SEC's traditional channels, and he believes that outdated disclosure forms and legal uncertainties are the main obstacles.

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

In terms of custody, Atkins supports the repeal 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 keep pace with the times 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 offer comprehensive services that include both 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 position in encryption

Atkins echoed Trump's call to make the United States 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 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 make policy through enforcement.

Industry insiders expect that the SEC will continue to advance 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 sector. This series of initiatives will inject new momentum into the development of the American encryption asset industry, while also providing important references for global encryption regulation.