SEC Chairman Advocates Comprehensive Reform of U.S. Digital Asset Policy

SEC Chairman Paul Atkins recently called for a comprehensive modernization of U.S. digital asset policy and proposed a three-part strategy for the regulation of issuance, custody, and trading.

On May 12, Atkins delivered a keynote speech at the latest roundtable meeting of the SEC's digital asset special working group, discussing tokenization and its potential to enhance the efficiency of capital markets.

Atkins likens the transformation of blockchain-based securities to the digital revolution in the music industry, believing that "on-chain" assets could fundamentally change the landscape of capital markets just as MP3s reshaped the way audio is distributed.

Under Atkins' leadership, the SEC's top priority is to establish a "reasonable regulatory framework" for the digital asset market, moving away from the unpredictable enforcement patterns of the past few years that have hindered industry innovation.

He promised that future policy-making would be conducted through formal channels rather than taking ad hoc actions, and he reiterated his recent related statements.

Atkins stated: "The SEC is entering a new phase of development."

Three-pronged reform plan

Atkins has set forth an ambitious reform agenda focused on promoting compliant digital asset issuance, expanding legitimate custody options, and modernizing the trading framework.

He pointed out that currently only a few projects have successfully registered their issuance products through the SEC's traditional channels, and stated that outdated disclosure forms and legal uncertainties are the main obstacles.

To address this issue, regulators will consider formulating more appropriate exemption clauses, safe harbor rules, and disclosure guidelines for digital native assets. He emphasized that the temporary employee guidelines are only a stopgap measure and need to be replaced by comprehensive rules established by the committee to create long-term effective standards.

In terms of custody, Atkins supports the repeal of Employee Accounting Bulletin No. 121, which previously imposed restrictive measures on the holding of digital assets. He calls for a broader clarification of the qualifications for "qualified custodians" and states that custody rules should keep pace with the times to reflect self-custody solutions and emerging best practices in the industry.

In terms of trading, Atkins stated support for allowing brokerage proprietary traders to provide comprehensive services, including digital assets and non-digital assets, on a unified platform. He also suggested the possibility of conditional exemptions for relief to allow the launch of new products that may not yet comply with existing rules.

Consolidating America's leadership in the digital asset space

Atkins echoed Trump's vision of making the U.S. the "global digital asset center" and warned that if the SEC cannot adapt to the changing landscape, innovation will flow overseas.

He praised the co-leaders of the newly established digital asset special working group, Mark Uyeda and Commissioner Hester Peirce, whose aim is to break down internal barriers and accelerate the issuance of guidance documents throughout the agency.

In his speech, Atkins emphasized the necessity of establishing rules that can both protect investors and support innovation. He stated that combating fraud remains a top priority, but the SEC's enforcement approach will return to its "original intention," which is to regulate violations of defined obligations rather than to create policy through enforcement.

The SEC is expected to continue advancing additional rule-making, staff guidance, and inter-agency coordination in the coming months, striving to make the United States a global leader in the field of tokenized financial infrastructure.