SEC Chair's Latest Speech: Reshaping the New Market Regulation System with the "ACT" Strategy

Author: Paul S. Atkins, Source: SEC Official Website, Translation: Shaw Jinse Finance

The Chairman of the U.S. Securities and Exchange Commission (SEC), Paul S. Atkins, recently delivered a keynote speech at the Washington Economic Club event. Atkins stated that since taking office, he has promoted the SEC to return to its core mission of “protecting investors, maintaining market order, and facilitating capital formation,” and criticized past regulatory rules for over-expansion, increasing market friction and uncertainty. Paul S. Atkins added that the SEC is accelerating the establishment of a clear regulatory framework for digital assets, collaborating with other regulatory agencies and Congress, and also proposed an “A-C-T” strategy, which includes advancing regulatory modernization (Advance), clarifying regulatory boundaries (Clarify), and reshaping the rule system based on fundamental principles (Transform), to enhance the competitiveness of the U.S. market and consolidate its position as a global investment and business environment.

Below is the full text of Paul S. Atkins’s speech**.**

Ladies and gentlemen, good morning. David, thank you for the warm introduction, and thank you for inviting me to the Washington Economic Club. I am honored to be here with you today and look forward to engaging in a dialogue with you shortly.

Of course, I also want to thank the market participants, business leaders, and colleagues from various government departments present today. Thank you all for coming and for your cooperation and support in our shared efforts.

Before sharing a few thoughts, please allow me to make a customary statement: The views I express here are solely my personal opinions as Chairman and do not necessarily represent the stance of the U.S. Securities and Exchange Commission (SEC) or other commissioners.

As David mentioned in his opening remarks, today marks the one-year anniversary of my tenure as SEC Chairman. In the early 1990s, I first served on the team of Chairman Richard Breeden and Chairman Arthur Levitt, and later served as a commissioner in the 2000s. These experiences have shaped how I fulfill my role as Chairman and helped me understand the SEC’s position within the entire financial system.

These experiences also allow me to see some inherent patterns from a unique perspective: Washington often hampers innovation and capital formation; layers of regulation keep piling up without regard for their costs and consequences; and once regulation becomes complex, it rarely reverts to simplicity.

In fact, over the years, the number of rules issued by the SEC has grown faster than the issues these rules are meant to or claim to address. Our regulatory scope has expanded continuously, but clarity and effectiveness have not kept pace. The commission has gradually deviated from the core guiding principle of economic significance, resulting in: friction where entrepreneurs need clear rules, and uncertainty where markets rely on confidence.

Against this backdrop, a year ago, I stood shoulder to shoulder with President Trump in the Oval Office and declared that it was time for the SEC to end its deviation from the right track. Today, I am pleased to report: we have achieved that.

A year ago, I emphasized the need for the agency to return to the core mission assigned by Congress. We have done so.

I called for the SEC to lay a solid regulatory foundation for digital assets. We have steadily advanced this process and collaborated with other regulatory agencies and Congress.

Most importantly, I urge my colleagues at the SEC to do everything possible to ensure that the U.S. remains the world’s best and safest place for investment and business. We will achieve this goal.

In short, a year ago I declared: the SEC has entered a new era.

This statement comes from the heart, and now I am more confident than ever to reaffirm it.

However, to understand the significance of our achievements, it is necessary to view them against the background of years of regulatory activism that preceded them.

Congress has entrusted the SEC with three complementary goals: protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

This statutory mission is designed with clarity and scope.

But as I mentioned earlier, in recent years, the commission has built a large number of regulatory obligations disconnected from these three core pillars, leading to a capture of the disclosure system and serving goals beyond investor interests; enforcement actions have, in fact, become tools for rulemaking; and the path to going public has become costly, litigious, and politically risky, prompting many entrepreneurs to stay private or list overseas, which is entirely understandable.

This agency, tasked with safeguarding the world’s top capital markets, has in many ways become a significant obstacle to market development.

In response, I proposed our “A-C-T” strategy, which relies on three independent yet interconnected pillars:

• A: Advance regulatory framework modernization

• C: Clarify regulatory jurisdiction boundaries

• T: Transform by returning to fundamental principles and reshaping the SEC’s rule system

Every initiative we undertake—every rule we propose, every interpretation we issue, every institutional reform we implement—can be categorized into at least one of these three pillars.

Next, I will elaborate on each.

1. Advance: Modernizing the Regulatory Framework

As I said, advancing the regulatory framework means aligning regulation with the real world, rather than remaining stuck in the way rules were initially crafted. After all, innovation never stops for regulation. The cost of falling behind in regulating digital assets is most evident here.

During the previous administration, innovators found that communication with the SEC often quickly turned into investigations.

The market has spoken: many businesses have moved to jurisdictions with more relaxed regulation. An entire generation of digital asset innovation has emerged outside the U.S., not because American entrepreneurs lack ambition or American investors lack interest, but because U.S. regulators lack the will.

Therefore, over the past year, the current SEC has firmly implemented President Trump’s goal of making the U.S. a global hub for digital assets. Building on the excellent work of our dedicated Crypto Assets Working Group, I launched “Project Crypto” to modernize securities regulation rules and facilitate on-chain market transformation. Recently, we issued classification standards for crypto tokens, dividing digital assets into five categories, four of which are not securities, providing long-awaited clear guidance. We are also about to introduce what I call an “Innovation Exemption,” offering a limited framework for market participants to promote tokenized securities trading on-chain, while the commission develops long-term rules.

Of course, modernizing institutional frameworks extends beyond digital assets. We have also reformed the mutual fund ETF share structure—potentially saving taxpayers billions—and established a new cross-border task force to combat efforts to evade U.S. investor protections by exploiting international borders. The market is global, and I believe investor protection should be too.

Advancing regulation also requires us to keep pace with capital flows—more and more capital is flowing into private markets, a natural result of overly strict regulation forcing banks out of financing small and growing companies.

The SEC is closely monitoring the funding gap filled by private credit, as well as emerging pressures in this area, including rising redemption demands and higher default expectations. I have made it clear that opacity in this sector could cause problems; valuation, transparency, and credit quality are critical; and when assessing investment suitability, high fees and low liquidity must be considered. Our goal, in collaboration with federal colleagues, is to enable more investors to make informed decisions under trustees’ guidance and with proper protections, participating in broader, more diversified investments.

2. Clarify: Defining Regulatory Jurisdiction Boundaries

The effectiveness of the SEC’s efforts to modernize regulation depends on how clearly we enforce the rules.

For decades, innovators have faced fragmented regulation and overlapping jurisdictions. To address this, I, together with CFTC Chairman Michael S. Selig, signed a historic Memorandum of Understanding last month. This MOU unified key definitions, clarified jurisdictional boundaries, and coordinated regulatory efforts in shared areas like digital assets.

Having dealt with both agencies for thirty years, I have seen firsthand that unclear jurisdiction and unreasonable regulation can stifle innovation. Therefore, I want the days of companies being forced to navigate dual registration and conflicting processes to be over soon. We will unify regulatory definitions, coordinate actions, and promote secure data sharing between the two agencies, transforming a long-neglected regulatory vacuum—full of the debris of financial product innovation—into fertile ground for innovation to take root and flourish.

3. Transform: Reshaping the Rule System

Finally, the third pillar of the “A-C-T” strategy is to reshape the SEC’s rule system—eliminating regulations that only add market burdens without benefiting investors.

Last summer, we withdrew 14 rule proposals that had been widely criticized, marking a systematic review of the entire disclosure system based on fundamental principles. For a long time, many regulations initially aimed at conveying information have instead become tools to obscure the truth. We have deviated from the core principle of “materiality,” shifting focus from information that rational investors consider important to information regulators find interesting.

As a result, with increasing disclosure burdens and declining numbers of listed companies, it is no surprise that the trend continues. When I left the SEC staff in 1994, there were over 7,800 companies listed on U.S. exchanges; a year ago, when I returned as Chairman, that number had dropped by about 40%. An astonishing coincidence is that today, about 40% of Americans do not hold U.S. stocks, missing out on the growth of companies they helped develop and almost unable to participate in the wealth created by these companies.

I believe each IPO is not only a milestone for the company but also an invitation to workers and savers to share in the prosperity of the next generation of American enterprises. The fewer companies willing to extend that invitation, the fewer Americans can participate.

Therefore, I have repeatedly stated that we are working hard to reverse the sharp decline in the number of listed companies. The key to this goal is to use materiality as a guiding principle, streamline disclosure requirements, and implement minimal regulation. Moreover, as a disclosure regulator, the SEC should not use rules to indirectly regulate matters under state jurisdiction or favor one side in corporate governance debates.

Looking ahead, I am eager for the commission to propose rules to implement my “Make IPOs Great Again” agenda. Regarding recent proposals, I have directed staff to evaluate the following directions:

1. Establish a “green channel” for regulatory IPOs, supplementing mechanisms designed by Congress in the JOBS Act;

2. Expand current regulatory relief measures, initially for emerging and small businesses, to more companies;

3. Simplify the “suspension of registration” process for nearly all listed companies, enabling them to quickly go public when market conditions are favorable;

4. Allow companies to choose whether to submit regulatory filings quarterly or semi-annually.

Of course, while we return to our core responsibilities and reduce unnecessary interference, we will also act decisively in areas where intervention is necessary. In my first year as Chairman, we reoriented enforcement to focus on fraud, launching genuine actions to address investor harm and uphold market integrity, rather than increasing case counts for media attention. This shift also reflects our renewed emphasis on holding individuals accountable, strengthening deterrence and better protecting investors.

The progress I have outlined today, though significant, is far from complete and has not yet been fully implemented. Our advances across statutory responsibilities mark that the SEC has regained its footing, moving forward steadily with rigor and restraint.

I am pleased to report that we have abandoned the institutional drift that characterized the previous administration and are recalibrating the agency’s positioning based on its statutory mission. Meanwhile, our active rulemaking agenda for the coming year will build on this good momentum.

In fact, as the United States approaches its 250th anniversary, I believe our capital markets must continue to demonstrate America’s national character, leading the world in market depth, vitality, and the ability to turn innovation into prosperity.

This has long been the promise our markets carry. Now, in this new era of the SEC, I am confident that promise will continue to be fulfilled.

Thank you very much for your attention today, and thank you for your patience and understanding.