Why is the U.S. SEC planning to eliminate mandatory quarterly reporting?

Author: Zhang Feng

On September 29, U.S. SEC Chairman Atkins pledged to implement minimal regulation and accelerate the proposal put forward by Trump to eliminate quarterly earnings reports for companies, allowing publicly listed companies to release financial reports once every six months instead of every 90 days as previously required. This policy shift not only marks a significant turn in the SEC's regulatory approach but also reflects the fundamental differences in the pace of development between the cryptocurrency business and traditional financial markets.

"The government should implement regulation of a 'minimum effective dose'—to both protect investors and allow businesses to grow and thrive." This is what Paul Atkins, chairman of the U.S. Securities and Exchange Commission (SEC), wrote in a recent commentary for the Financial Times.

I. Regulatory Transformation: The SEC's "Minimum Effective Dose" Principle

The SEC is undergoing a complete shift from the strict regulation of the Biden administration to a "light-touch" regulatory approach. Chairman Atkins criticized the "aggressive regulatory and enforcement stance" of his predecessor Gary Gensler, marking a historic turning point in the U.S. financial regulatory mindset. Atkins clearly stated that it is now time for the "SEC to remove its influence and allow the market to determine the best reporting frequency based on factors such as company industry, size, and investor expectations." He argued that regulatory change should not be driven by political trends and sharply criticized the European regulatory model as being driven by "theorists."

This regulatory approach is summarized as "minimum effective dose" regulation - finding a balance between protecting investors and allowing businesses to thrive. The SEC is not only considering the elimination of quarterly reports, but its attitude in the cryptocurrency space has also shifted from the "aggressive crackdown" of the Gensler era to a more "gentle acceptance." This confirms that the "light-touch" regulatory approach will be fully implemented.

2. Cryptocurrency Business: The Specificity of Development Rhythm and Information Disclosure

The cryptocurrency asset market has a development pace and technical characteristics that are distinctly different from traditional finance, and these particularities determine its different information disclosure requirements.

The information disclosure methods of crypto businesses are significantly different from traditional enterprises. Its core feature lies in technology-driven real-time transparency and a community-based communication mechanism. Traditional quarterly reports rely on lagging financial data, while crypto projects depend on real-time public on-chain data (such as transaction volume and active addresses). Key decisions are made through decentralized governance proposals voted on by the community, and progress is disclosed dynamically through technological roadmaps and community forums. This disclosure method originates from its agile development, global distribution, and the unique nature of its token economic model, shifting information disclosure from periodic and standardized to continuous, technical, and community-driven.

The speed of technological iteration is extremely fast. Cryptocurrency projects typically follow an agile development model, constantly iterating products based on market feedback and code testing. Unlike traditional companies that plan development on a quarterly basis, cryptocurrency projects may undergo multiple protocol upgrades and feature updates within a month, making quarterly financial reports often unable to accurately reflect this rapidly changing technological environment.

Business models transcend national borders. The nature of cryptocurrency business is inherently global, unbound by geographical boundaries, with its user base, liquidity provision, and governance structure dispersed around the world. This makes it challenging for quarterly financial reports based on a single jurisdiction to fully reflect the business situation, necessitating a more flexible and customized approach to information disclosure.

Market dynamics are complex and ever-changing. The cryptocurrency market operates 24/7, with price volatility far exceeding that of traditional assets. At the same time, DeFi protocols and token economic models have created entirely new business models, with value creation and revenue sources that are fundamentally different from traditional enterprises.

The "Guidelines for the Issuance and Registration Disclosure of Securities in the Crypto Asset Market" released by the SEC in April 2025 requires companies to provide detailed explanations of their business models, token functions, technical architecture, and development milestones, reflecting an acknowledgment of the uniqueness of crypto businesses.

3. Autonomous Decision Making Frequency: Why is it Beneficial for Cryptocurrency Business?

Allowing crypto companies to independently determine the frequency of information disclosure will bring multiple positive impacts to this emerging industry.

Improve the quality of information disclosure. The decision to determine the reporting frequency autonomously does not equate to reducing transparency. On the contrary, it allows project parties to conduct more comprehensive and in-depth information disclosure at critical moments, rather than rushing to report to meet quarterly deadlines. After the UK reinstated the semi-annual reporting system in 2014, some large companies, based on their own needs, still chose to continue publishing quarterly reports, which proves that the market itself can effectively determine the frequency and depth of information disclosure.

Match the rhythm of technological development. The semi-annual report system is more in line with the technological development cycle of crypto projects. Crypto projects typically progress according to their technological roadmaps, and key protocol upgrades and product releases do not necessarily align with financial quarters. The autonomy to decide the frequency of disclosures allows project teams to comprehensively disclose information after reaching significant technological milestones, rather than mechanically reporting on a fixed quarterly basis.

Focus on long-term value creation. Canceling quarterly reports helps to reduce excessive attention to short-term price fluctuations. The crypto market is already known for its high volatility, and quarterly reports may exacerbate this short-termism. A semi-annual reporting system can encourage investors to focus on fundamentals and long-term technological advancements, rather than quarterly financial data.

Reduce compliance costs. Frequent report preparation requires a significant investment of legal, accounting, and human resources. For many crypto startups that are still developing products and building user bases, these costs can be particularly burdensome. Reducing the frequency of disclosures can directly lower these companies' compliance costs (audit, personnel, time), allowing them to focus more on long-term strategy rather than short-term performance fluctuations.

4. Investor Protection: Information Disclosure Reform and Balance of the Right to Know

The SEC's cancellation of the quarterly report plan has raised concerns about whether it will undermine investors' right to know. This issue requires a comprehensive analysis of the needs of different investors and the new possibilities brought about by technological changes.

The current information disclosure requirements are increasingly difficult to apply to the uniqueness of the crypto market. Crypto projects typically provide real-time business metrics through on-chain data, such as trading volume, number of active addresses, and total locked value ( TVL ). This real-time data may better reflect the health of the project than quarterly financial statements. Additionally, the information disclosure of crypto projects can be implemented in a more transparent and tamper-proof manner through blockchain technology, such as recording important information directly on a distributed ledger.

However, on the other hand, there are indeed differences in information acquisition capabilities. Institutional investors usually have dedicated teams and advanced tools to continuously track the dynamics of the companies they hold, while retail investors mainly rely on publicly available financial reports. Currently, the A-share market is still dominated by retail investors, who have weak information acquisition capabilities. The cancellation of quarterly reports will significantly exacerbate information asymmetry, which is detrimental to investor protection.

The balance lies in aligning with the actual business situation. The SEC may consider differentiated disclosure requirements: rewarding compliant publicly listed companies by reducing the frequency of disclosures; while maintaining or even increasing the frequency of disclosures for companies with a history of fraud and chaotic internal governance. A 2019 CFA Institute survey of global members showed that 59% disagreed with reducing reporting frequency, citing potential information leakage and market unfairness as reasons. Six months is a long time for information leakage, and the information provided to certain investors may be asymmetric, potentially leading to leaks that undermine market fairness.

V. Global Impact: The Spillover Effects of the Shift in U.S. Regulation

The SEC's shift towards a "light-touch" regulatory approach could have profound implications for global compliance trends, reshaping the competitive landscape of international financial regulation.

The shift in the United States may force other financial centers to reassess their regulatory frameworks to remain competitive. If the U.S. successfully attracts crypto companies and investors through more flexible disclosure requirements, other strictly regulated regions may face pressure from business outflows.

Atkins has explicitly criticized the regulatory model in Europe driven by "theorists", specifically naming the EU's Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). He believes these directives require companies to disclose "matters that may be socially significant but are generally not financially material," and these mandatory requirements could pass costs onto American investors and customers.

The SEC's shift may accelerate the global trend of differentiated disclosure: different companies apply different disclosure standards based on their size, industry, and investor structure. At the same time, technology-driven disclosures may replace fixed-frequency disclosures, with real-time data access and blockchain verification becoming standard practices for future information disclosures. The emphasis on substantive information will also increase, with regulatory focus shifting from checking compliance with fixed reporting requirements to assessing whether companies provide substantive information relevant to investment decisions.

The SEC's cancellation of the quarterly report plan reflects the fundamental differences in the development pace of the crypto business compared to traditional enterprises, and also hints at the future direction of technology-driven financial regulation. The regulatory "thumb" is moving away from the market scale, and blockchain technology itself may be the most effective path to achieving truly "what you say counts" transparency in disclosures. The history of financial regulation has never been a simple swing between strictness and leniency, but rather a search for the best balance while constantly adapting to market changes.