SEC's new chairman Atkins pushes for encryption regulatory reform: from enforcement priority to promoting innovation

The new chairman of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, delivered the most significant speech since taking office at the "SEC Speaks" conference on May 19, clearly declaring that the cryptocurrency industry is entering a "new era." He stated that for the past few years, the SEC's regulatory ambiguity has severely hindered innovation and development in the crypto market, and its "enforcement-first" high-pressure policy has left market participants at a loss. Under new leadership, the SEC will return to its core mission—"promoting rather than stifling innovation"—and pave the way for the issuance, custody, and trading of Crypto Assets by establishing a clear regulatory framework. This statement not only marks a significant shift in U.S. crypto regulatory policy but also injects new confidence into the global crypto industry.

From "law enforcement priority" to "rules first"

Atkins openly criticized the regulatory strategy during the tenure of former chairman Gary Gensler in his speech. He pointed out that the SEC's past enforcement model of "shoot-first-and-ask-questions-later" has led to enormous uncertainty for the crypto industry in the United States. Many projects have been forced to move overseas due to a lack of clear compliance pathways, stifling innovation momentum. Atkins emphasized that the SEC will no longer rely on "temporary enforcement" to formulate policies, but will instead set "tailored" standards for market participants through "rule-making, interpretive authority, and exemptions."

Specifically, Atkins proposed three major regulatory pillars: token issuance, asset custody, and trading infrastructure. In terms of token issuance, he suggested that the SEC explore a simplified registration framework specifically designed for crypto assets, such as adjusting the existing S-1 form to eliminate disclosure requirements unrelated to crypto assets (like executive compensation) and instead focus on key information such as smart contract audits, token economics, and decentralized governance models. Additionally, he reiterated the "safe harbor" proposal put forth by SEC Commissioner Hester Peirce in 2021, which aims to provide a three-year exemption for blockchain projects to achieve decentralization while meeting basic transparency requirements.

In terms of asset custody, Atkins clearly stated that the controversial SAB 121 accounting rule, which has been criticized for "hindering responsible custody solutions," will be abolished. He also proposed expanding the definition of "qualified custodians" to include crypto native custodial institutions, licensed exchanges, and even decentralized protocols, while supporting the allowance for investment advisors and funds to self-custody under specific conditions to accommodate industry practices involving cold wallets and non-custodial structures.

Regarding trading infrastructure, Atkins advocates for easing restrictions on crypto exchanges, allowing them to trade securities and non-securities assets (such as Bitcoin and Ethereum) on a single platform, and reforming the Alternative Trading System (ATS) framework to reduce the legal risks faced by platforms labeled as "unregistered securities exchanges." He specifically mentioned that the SEC will explore providing conditional exemptions for innovative projects to prevent companies from being forced to go overseas due to regulatory barriers.

Responding to market expectations, boosting industry confidence

Atkins' speech quickly sparked a heated response from the crypto market. Cointelegraph reported that Atkins' statements were seen as a "watershed moment in U.S. crypto regulation," ending the "siege" style regulation of the industry during the Gensler era. Discussions on the X platform were equally fervent, @Cointelegraph

Post stated: "SEC Chairman Paul Atkins said this is a new day for institutions, ending the enforcement priority strategy, and committing to tailored encryption rules." Industry insiders generally believe that Atkins' pro-market stance will bring a more stable environment for crypto startups, investors, and institutional players, helping the U.S. regain its leading position in global crypto innovation.

It is worth noting that Atkins's regulatory vision aligns closely with the policies of the Trump administration. Trump promised during his campaign to make the United States the "global crypto capital" and signed an executive order in January to promote the development of public blockchain networks. Atkins clearly stated in his speech that he would work closely with the Trump administration and Congress to ensure that the regulatory framework supports this goal.

The challenges remain, but the future is promising.

Despite Atkins' reform blueprint being exciting, industry observers remind that regulatory transformation is not achieved overnight. The crypto industry still needs to face complex compliance requirements, especially in terms of anti-fraud and investor protection. Atkins emphasized in his speech that the SEC will continue to crack down on illegal activities to ensure market fairness and transparency. Additionally, his personal background—holding crypto assets worth between 1 million and 6 million dollars, as well as having provided consulting services for several crypto companies—has also raised concerns among some Democratic lawmakers. Senator Elizabeth Warren previously criticized his financial ties to the crypto industry, which could lead to conflicts of interest, although Atkins has pledged to divest related assets to ensure fairness.

The market's optimistic expectations for Atkins have already been reflected in prices. Bitcoin recently reached an all-time high, partly due to investor confidence in regulatory easing. In addition, Bloomberg ETF analyst Eric Balchunas pointed out that there are currently 72 crypto-related ETFs (including assets such as XRP, Litecoin, and Solana) awaiting SEC approval, and Atkins' leadership could accelerate the launch process of these products, injecting billions of dollars in new capital into the market.