SEC Faces Rapid Changes as Crypto-Friendly Atkins Awaits Confirmation

The Senate Banking Committee has scheduled a confirmation hearing for Paul Atkins, the nominee for the position of Chair of the Securities and Exchange Commission (SEC), on March 27. Atkins, known for his pro-cryptocurrency stance, is expected to advance regulations that are favorable to the cryptocurrency industry. This hearing comes at a time when the SEC is undergoing significant changes under the leadership of interim Chairman Mark Uyeda, who has implemented a series of policy shifts, particularly in the realm of cryptocurrency regulations.

Uyeda, who took over as acting SEC chief in January, has initiated a revamp of the agency's cryptocurrency policies. His approach has been characterized by a return to what he describes as the SEC's "narrow mission to facilitate capital formation while protecting investors and maintaining fair, orderly, and efficient markets." This shift is evident in the agency's recent actions, which include dropping more than 10 high-profile crypto-enforcement cases, extending compliance deadlines for three new rules, declaring most memecoins exempt from securities laws, and terminating litigation related to climate-reporting regulations.

The transformation at the SEC extends beyond policy changes to include significant staffing adjustments. The agency has offered early retirement incentives and plans to eliminate leases for certain regional offices. These changes, coupled with directives from the White House and the new Department of Government Efficiency, have reportedly created an atmosphere of uncertainty within the agency. Staff anxiety is high and morale is low, with many employees actively seeking new positions.

The business community has been quick to respond to these regulatory shifts. The Managed Funds Association submitted a 13-page letter outlining business-friendly policy recommendations, while SIFMA, representing broker-dealers and financial services firms, urged the SEC to pause fee collections related to the Consolidated Audit Trail. The SEC has already implemented changes aligned with some of these requests, including exempting personally identifiable information from CAT storage requirements and extending compliance deadlines for several rules.

While Uyeda serves as interim chairman, Atkins awaits confirmation. The Senate Banking Committee is looking to hold Atkins's confirmation hearing on March 27, though he has yet to file his final financial disclosures. The current changes at the SEC are distinguished by their scope and the influence of White House directives, which have accelerated the pace of regulatory shifts. From a policy perspective, much of this was expected, but the backdrop of rapid-fire executive orders and federal workforce changes makes the situation challenging.

Atkins, a long-time crypto supporter, was nominated by President Donald Trump back on Dec. 4 to lead the SEC under his administration. Former Chairman Gary Gensler stepped down from the position on Jan. 20, and the SEC has been led by Acting Chair Mark Uyeda. Atkins was previously appointed by George W. Bush as an SEC commissioner from 2002 to 2008. Atkins’ hearing had been delayed due to pending financial disclosure paperwork. Atkins’ financial disclosure likely had a "heavy lift" given his marriage into a billionaire family.

Atkins founded the consulting firm Patomak global partners in 2009, whose clients included crypto exchanges and DeFi platforms. He also joined The Digital Chamber's board of advisers in 2020. A crypto task force, led by Republican SEC Commissioner Hester Peirce, was launched last month and among other priorities has been working on distinguishing which "crypto assets" are securities. Over the past month, the agency has rescinded controversial crypto accounting guidance and dropped cases against coinbase, OpenSea, XRP and UniSwap, among others. Notably, there are also at least 60 spot crypto ETF proposals waiting for review.