The world of securities is undergoing a major transformation. As digital assets gain mainstream traction, traditional financial systems are being forced to adapt.
At the Crypto Roundtable on Tokenization, SEC Chair Paul Atkins laid out his vision for how the U.S. must evolve its regulatory approach to on-chain securities and crypto assets.
Atkins likened the shift to on-chain securities to the digital revolution in music, explaining how blockchain-based assets could unlock new innovations in capital markets.
“Just as digital audio transformed the music industry, tokenization could reshape how we issue, trade, and use securities,” he said.
Legacy Regulations Are Holding Crypto Back
Atkins made one thing clear: the SEC’s current rules weren’t built for blockchain. He openly criticized the agency’s past approach, saying, “First, they buried their heads in the sand, hoping crypto would go away. Then, they shifted to a shoot-first, ask-questions-later style of enforcement.”
This lack of clarity has left companies guessing on how to legally issue crypto assets. Instead of relying on enforcement actions, Atkins argued for clear regulatory guidelines that actually fit blockchain technology and innovation.
“A key priority of my chairmanship will be to develop a rational regulatory framework for crypto asset markets that establishes clear rules of the road for issuance custody and trading of crypto assets while continuing to discourage Bad actors from violating the law.”
Custody Rules Must Evolve
Custody remains one of the biggest regulatory hurdles for crypto. Atkins slammed SAB 121, calling it a grave mistake that created confusion in the market. “The SEC has no business overreaching like this,” he asserted.
Beyond fixing SAB 121, Atkins suggested expanding custody options to accommodate self-custodial solutions, which often use stronger security measures than legacy custodians.
” Custody rules may need to be updated to allow advisors and funds to engage in self custody under certain circumstances,” he said. “It may be necessary to repeal and replace the special purpose broker dealer framework with a more rational regime”.
A New Era for Crypto Trading
Atkins wants the SEC to modernize how crypto assets are traded, allowing registered broker-dealers to offer both securities and non-securities under one platform. He also floated revamping ATS regulations to better accommodate digital assets.
“We cannot encourage innovation by forcing companies offshore,” he emphasized, adding that regulatory exemptions might be needed to ensure U.S.-based firms can compete globally.
The SEC’s Next Steps on Crypto Regulation
Atkins made it clear that existing securities laws may be ill-suited for blockchain-based assets—and regulatory changes are needed to ensure the U.S. remains competitive. He stressed that the SEC has broad discretion to accommodate the crypto industry and promised to push for clear exemptions and safe harbors where current frameworks fall short.
He also highlighted custody as a critical issue, arguing that some self-custodial solutions offer better security than legacy custodians. In his view, advisors and funds should have greater flexibility to engage in self-custody under certain circumstances—especially as technology advances beyond traditional financial infrastructure.
On trading, Atkins pointed out that no law prevents broker-dealers from facilitating securities and non-securities transactions together. He suggested modernizing the ATS regulatory regime to better serve digital assets and potentially enabling crypto asset listings on national securities exchanges.
Ultimately, Atkins framed the SEC’s role as ensuring the U.S. leads in crypto asset markets rather than driving companies offshore. He expressed his commitment to developing a rational framework that fosters innovation while maintaining investor protection. “It is a new day at the SEC,” he declared, signaling a shift away from enforcement-first tactics toward clear, structured rulemaking.
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