Crypto Shakeup Ahead: SEC Hits the Gas on Core Framework Rewrite
The U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins discussed a detailed framework for regulating digital assets at the crypto roundtable on May 12, placing strong emphasis on three regulatory pillars: issuance, custody, and trading. Calling out the Commission’s previous handling of crypto as both neglectful and antagonistic, Atkins committed to a clear shift in policy. “I intend for the Commission to establish clear and sensible guidelines for distributions of crypto assets that are securities or subject to an investment contract,” he stated, as he laid the foundation for what he called a more rational and innovation-compatible strategy.
On the issuance of crypto assets, Atkins acknowledged that regulatory ambiguity has deterred companies from using compliant channels like registered offerings and Regulation A. He said:
I have asked the Commission staff to consider whether additional guidance, registration exemptions, and safe harbors are needed to create pathways for crypto asset issuances within the United States.
“I believe that the Commission has broad discretion under the securities acts to accommodate the crypto industry, and I intend to get it done,” he continued. Atkins also noted that while some interpretive guidance has already been issued by SEC staff, further Commission-level actions are essential to create a sustainable regulatory environment for emerging digital offerings.
Regarding custody, the SEC chair voiced strong support for expanding how registrants manage crypto assets: “I support providing registrants with greater optionality in determining how to custody crypto assets. Commission staff recently removed a significant impediment for companies seeking to provide crypto asset custodial services by rescinding Staff Accounting Bulletin No. 121.” He went further to address existing limitations: “Broker-dealers are not and never were restricted from acting as a custodian for non-security crypto assets or crypto asset securities, but Commission action may be needed to clarify the application of the customer protection and net capital rules to this activity.” Atkins suggested that new rules may be required to legitimize modern custody methods, including self-custody.
In discussing trading, Atkins called for broader flexibility to reflect real market demand. He revealed:
I am in favor of allowing registrants to trade a broader variety of products on their platforms and in response to market demand, activities which previous Commissions had prevented.
He indicated that existing rules for alternative trading systems could be revisited and tailored for crypto. To prevent the flight of innovation to foreign jurisdictions, Atkins explained: “While the Commission and its staff work to develop a comprehensive regulatory framework for crypto assets, securities market participants should not be compelled to go offshore to innovate with blockchain technology. I would like to explore whether conditional exemptive relief would be appropriate for registrants and non-registrants that seek to bring new products and services to market that may otherwise not be compatible with current Commission rules and regulations.”
While industry advocates may welcome these remarks as a long-awaited course correction, skeptics remain concerned about potential gaps in investor protections. Nevertheless, supporters argue that a tailored regulatory model could enable responsible innovation and keep the U.S. competitive in the evolving crypto landscape.