SEC Chair Atkins Outlines New Crypto Regulations to Boost US Leadership

Paul Atkins, the newly appointed chair of the U.S. Securities and Exchange Commission (SEC), has outlined his priorities for developing new regulations for crypto asset issuance, custody, and trading. Atkins, who took office in April, addressed the Commission’s Crypto Task Force Roundtable on Tokenization, emphasizing the need for a rational regulatory framework to position the United States as the global leader in crypto technology.

Atkins highlighted that the SEC’s existing rules and regulations do not adequately address the innovative use cases of blockchain technology. He stated that for the U.S. to achieve President Trump’s vision of becoming the ‘crypto capital of the planet,’ the Commission must adapt to technological advancements and consider regulatory changes to support on-chain securities and other crypto assets. He noted that rules designed for traditional, off-chain securities may hinder the growth of blockchain technology.

A key focus of Atkins’ chairmanship will be to establish clear guidelines for the issuance, custody, and trading of crypto assets. He directed SEC officials to draft clear and sensible guidelines for the distribution of crypto assets that fall under securities or investment contracts. Atkins believes the Commission has the authority under securities acts to accommodate the crypto industry and intends to facilitate this process.

In terms of custody, Atkins aims to provide greater flexibility for how crypto assets are safeguarded. He emphasized the need for clarity on the types of custodians that qualify as ‘qualified custodians’ under the Advisers Act and Investment Company Act. Additionally, he proposed reasonable exceptions from qualified custody requirements to accommodate common practices within crypto asset markets. Many advisers and funds already use self-custodial solutions with advanced technology, which may necessitate updates to custody rules to allow for self-custody under certain conditions.

Atkins also expressed support for broker-dealers that wish to offer both securities and non-securities trading within the same app. He clarified that federal securities laws do not prohibit registered broker-dealers with an alternative trading system from facilitating trading in non-securities, including through ‘pairs trading’ between securities and non-securities. Atkins has tasked the SEC staff with devising ways to modernize the alternative trading system (ATS) regulatory regime to better accommodate crypto assets.

In summary, Atkins’ vision for the SEC involves creating a regulatory environment that fosters innovation in the crypto industry while ensuring compliance with securities laws. By developing clear guidelines for issuance, custody, and trading, and by modernizing the ATS regulatory regime, Atkins aims to position the U.S. as a leader in the global crypto market. His approach emphasizes the need for regulatory flexibility to support the unique characteristics of blockchain technology and crypto assets, while also addressing the concerns of bad actors and ensuring market integrity.