SEC's new chairman Atkins delivers his first keynote speech: reconstructing the encryption asset regulatory framework, promoting the securities on-chain revolution in three major areas.

Source: SEC

Compiled by: Azuma, Odaily Planet Daily

Editor's Note: On May 12, local time in the United States, the special task force on crypto assets under the U.S. Securities and Exchange Commission (SEC) held its fourth cryptocurrency roundtable meeting. The theme of this meeting was "Tokenization: On-Chain Assets - The Intersection of Traditional Finance and Decentralized Finance."

It is worth mentioning that Paul Atkins, who officially took office as SEC Chairman on April 22, attended the roundtable meeting and delivered a lengthy speech on cryptocurrencies for the first time in his capacity as SEC Chairman (Note: At the third meeting, Paul Atkins, who had just been in office for four days, gave an opening speech, but it was only a few words).

In his speech, Paul Atkins mentioned that "securities are increasingly migrating from traditional (off-chain) databases to blockchain-based (on-chain) ledger systems. A core priority during his tenure is to establish a reasonable regulatory framework for crypto asset markets, setting clear rules for the issuance, custody, and trading of cryptocurrencies, while continuously curbing illegal activities. Furthermore, the SEC's regulation of cryptocurrencies will no longer rely on controversial enforcement actions, but will utilize existing rule-making authority, interpretive authority, and exemptions to set precise applicable standards for market participants."

The following is the full text of Paul Atkins' speech, compiled by Odaily Planet Daily.

Thank you all, good afternoon. I am honored to speak to you distinguished individuals at today's roundtable on tokenization. I appreciate the participation of all the panel members.

The topic discussed this afternoon is timely — securities are increasingly migrating from traditional (or "off-chain") databases to blockchain-based (or "on-chain") ledger systems.

The migration of securities from off-chain systems to on-chain systems is comparable to the evolution of audio recordings from vinyl records to cassette tapes and then to digital software decades ago. Encoding audio into a digital file format that can be easily transmitted, modified, and stored has unleashed immense innovation potential for the music industry. Audio has broken free from the shackles of static fixed formats, suddenly able to achieve compatibility and interoperability across multiple devices and applications. It can be combined, split, and programmed to create entirely new products. This has also spawned new types of hardware devices and streaming business models, greatly benefiting consumers and the U.S. economy.

Just as the digital audio revolution reshaped the music industry, securities on the blockchain are expected to transform the securities market through new methods of issuance, trading, holding, and usage. For example, on-chain securities can utilize smart contracts to transparently distribute dividends to shareholders on a regular basis; tokenization can also convert relatively illiquid assets into liquid investment opportunities, promoting capital formation. Blockchain technology is expected to open up numerous innovative application scenarios for securities, fostering new market activities that are not yet covered by current SEC regulations.

To realize President Trump's vision of making the United States the global center for crypto assets, the SEC must keep pace with innovation and assess whether the existing regulatory framework needs to be adjusted to accommodate on-chain securities and other crypto assets. Regulations designed for off-chain securities may be incompatible or unnecessary for on-chain assets, and may instead hinder the development of blockchain technology.

During my tenure, a core priority is to establish a reasonable regulatory framework for the cryptocurrency market, setting clear rules for issuance, custody, and trading while continuously curbing illegal activities. Clear rules are crucial to protecting investors from fraud—especially in helping them identify illegal and fraudulent schemes.

The SEC has entered a new era. Policy making will no longer be achieved through temporary enforcement actions, but will instead use existing rule-making, interpretive, and exemption powers to set precise applicable standards for market participants. Enforcement efforts will return to the original intent of congressional legislation - focusing on combating violations of legal obligations, particularly in cases involving fraud and market manipulation.

This work requires collaboration among multiple departments within the SEC, so I am very pleased that Commissioner Uyeda and Commissioner Peirce have jointly established the cryptocurrency asset working group. For a long time, the SEC has suffered from policy silos, and this working group demonstrates how we can break down departmental barriers to provide the public with the long-awaited clarity and certainty in policy.

Next, I will elaborate on the three key areas of cryptocurrency asset policy - issuance, custody, and trading.

issuance

First, I will push the SEC to establish clear and reasonable guidelines for the issuance of securities-like crypto assets or investment contract-like crypto assets. Currently, only four crypto asset issuers have completed financing through registered issuance or Regulation A exemptions. Issuers generally avoid this method of issuance, partly due to the difficulty in meeting the corresponding disclosure requirements. If the issuing entity does not intend to issue regular securities, such as stocks, bonds, or notes, it is also difficult for the issuing entity to determine whether the crypto assets constitute "securities" or are subject to investment contracts.

In recent years, the SEC first adopted what I call an "ostrich policy" in response – fantasizing that crypto assets would just disappear on their own; then it shifted to a "shoot first, ask questions later" enforcement model. Although they claim to be willing to communicate with potential registrants ("consultation welcome"), it has proven to be at most a fleeting moment and more often misleading – because the SEC has not made the necessary adjustments to the registration forms to adapt to new technologies. For example, the S-1 form still requires detailed disclosures of executive compensation and the use of funds, which may be neither relevant nor important for investment decisions in crypto assets. Although the SEC has adjusted registration forms for asset-backed securities and real estate investment trusts, it has not taken similar actions regarding the crypto assets that have increasingly captured investors' attention in recent years. We cannot encourage innovation by "cutting corners."

I am committed to pushing the SEC to establish new guidelines. The SEC staff recently released a statement regarding specific registration and disclosure obligations, clarifying that the issuance of certain crypto assets does not involve federal securities laws. I hope the staff will continue to clarify other types of issuances and assets according to my instructions. However, existing registration exemptions and safe harbor rules may not fully apply to the issuance of certain crypto assets. I believe that relying on staff statements in this way is extremely temporary — action at the SEC level is crucial and necessary, and I have asked the staff to evaluate whether additional guidance, registration exemptions, and safe harbor rules are needed to open new paths for crypto asset issuance within the United States. I believe the SEC has ample discretion under the securities law framework to embrace the crypto industry, and I will definitely push for its implementation.

Custody

Secondly, I support granting registration agencies more autonomy in choosing ways to custody cryptocurrency assets. Recently, staff eliminated a significant barrier for companies providing cryptocurrency custody services by rescinding "Staff Accounting Bulletin No. 121" (SAB-121). This bulletin was a major misstep — staff did not have the authority to replace committee actions on such a broad scale without notifying the rulemaking process. This move not only caused unnecessary confusion, but its impact also exceeded the SEC's jurisdiction. However, beyond the repeal of SAB-121, we can take further steps to promote competition in the compliant custody services market.

It is necessary to clarify the identification criteria for "qualified custodians" under the Investment Advisers Act and the Investment Company Act, and to set reasonable exemptions for common operations in the cryptocurrency asset market. Many advisors and funds have used self-custody solutions that are more advanced than the technologies employed by some custodians in the market, which can more effectively ensure asset security. Therefore, custodian rules may need to be updated to allow advisors and funds to self-custody under specific circumstances.

In addition, it may be necessary to abolish the current "special purpose broker" framework and establish a more reasonable system. Currently, there are only two special purpose brokers operating, which clearly stems from the significant restrictions imposed by this model. Brokers have never been prohibited from custodizing non-securities crypto assets or securities crypto assets, but SEC action may be needed to clarify the applicable standards of customer protection rules and net capital rules for such activities.

transaction

In addition, I support allowing registered institutions to trade a wider variety of products on the platform based on market demand—these activities have been prohibited by previous SEC administrations. For example, some brokers have attempted to launch a "super app" that integrates securities, non-securities, and other financial services. The current securities laws do not prohibit registered brokers with alternative trading systems from providing non-securities trading services, including "pair trading" between securities and non-securities. I have requested staff to study how to modernize the ATS regulatory framework to better accommodate crypto assets, while also assessing whether further guidance or rules are needed to support the listing and trading of crypto assets on national securities exchanges.

In the process of the SEC establishing a comprehensive regulatory framework, market participants should not be forced to seek blockchain innovation overseas. I will explore whether conditional exemptions can be granted to registered and non-registered entities attempting to launch new products and services—these innovations may not fully comply with existing regulatory requirements.

I look forward to working with colleagues in the Trump administration and Congress to make the United States the best participant in the global cryptocurrency market.