Key Takeaways
- SEC chair calls for modern on-chain securities-focused regulations.
- Paul Atkins’ proposal was a keynote address for the upcoming fourth SEC roundtable.
- The upcoming roundtable would focus on modern crypto issuance and custody regulations.
The U.S. Securities and Exchange Commission (SEC)’s Chair Paul Atkins says legacy securities rules are falling behind the pace of innovation, and may no longer apply to blockchain-based assets.
In his latest address, the SEC chair clarified that a forward-looking approach is needed to ensure that regulations protect investors and foster innovation.
Legacy Rules Fall Short in a Blockchain-Driven Market
SEC Chair Paul Atkins argued that the agency’s existing regulations, originally designed for off-chain securities, are increasingly misaligned with the realities of blockchain-based finance.
Atkins emphasized a growing industry shift, as more securities migrate from centralized databases to decentralized, on-chain ledgers.
He warned that applying outdated regulatory frameworks to this evolving market could stifle innovation and constrain the growth of blockchain technology.
“The Commission must keep pace with innovation and consider whether regulatory changes are needed to accommodate on-chain securities and other crypto assets,” Atkins said.
He pointed specifically to the rise of tokenization, where traditional financial instruments are issued directly on blockchain networks. The current rules, he noted, were never built for this type of infrastructure.
“Rules and regulations designed for off-chain securities may be incompatible with or unnecessary for on-chain assets,” Atkins added.
In response, the SEC is evaluating whether new definitions, exemptions, or frameworks are necessary to address emerging needs, particularly around how tokenized assets are issued, recorded, and held in custody.
From Enforcement to Formal Rulemaking
Atkins also outlined a broader change in regulatory strategy under Donald Trump’s administration. He criticized the previous SEC leadership under Gary Gensler for its reliance on enforcement as a substitute for rulemaking.
“Policymaking will no longer result from ad hoc enforcement actions,” Atkins said. “The Commission will utilize its existing rulemaking, interpretive, and exemptive authorities to set fit-for-purpose standards.”
Future guidance may include specific exemptions and provisions for crypto custody, including self-custody in limited cases—an area that has long been a regulatory gray zone.
Toward Constructive Crypto Regulation
The SEC is currently conducting a series of roundtables to develop comprehensive rules for digital assets, in coordination with legal experts, market participants, and other stakeholders.
Under Atkins’ leadership, the agency appears increasingly focused on crafting a workable regulatory framework that encourages responsible innovation while cracking down on fraud and abuse.
The upcoming roundtable could mark a turning point in the U.S.’s approach to crypto regulation, shifting from reactive enforcement to proactive policymaking designed specifically for blockchain-native assets.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
