Original Title: Keynote Address at the Crypto Task Force Roundtable on Tokenization
Original Author: Paul S. Atkins
Original Translation: Azuma, Odaily Planet Daily
Editor's Note: On May 12 local time, the SEC's special working group on crypto assets held its fourth roundtable meeting on cryptocurrencies, focusing on the theme of (Tokenization: Assets on the Chain—The Intersection of Traditional Finance and Decentralized Finance). Notably, Paul Atkins, who officially took office as SEC Chairman on April 22, attended the roundtable and delivered an extensive speech on cryptocurrencies for the first time as SEC Chairman (Note: During the third meeting, Paul Atkins had only given a brief opening statement just four days into his term). In his speech, Paul Atkins mentioned that 'securities are increasingly migrating from traditional (off-chain) databases to blockchain-based (on-chain) ledger systems, and his core priority during his term is to establish a reasonable regulatory framework for the crypto asset market, creating clear rules for the issuance, custody, and trading of cryptocurrencies while continuously curbing illegal activities. Furthermore, the SEC's regulation of cryptocurrencies will no longer rely on controversial enforcement actions but will use existing rule-making, interpretive, and exemption authorities to set precise applicable standards for market participants. Below is the full text of Paul Atkins' speech, translated by Odaily Planet Daily.
Thank you all, good afternoon. I am honored to speak today at this roundtable on tokenization among such distinguished individuals. Thank you to all the panel members for your participation.
The topic discussed this afternoon is timely—the securities market is increasingly migrating from traditional (or 'off-chain') databases to blockchain-based (or 'on-chain') ledger systems.
The migration of securities from off-chain systems to on-chain systems is comparable to the evolution of audio recording from vinyl records to cassette tapes and then to digital software decades ago. Encoding audio into a digital file format that can be easily transmitted, modified, and stored has released tremendous innovative potential for the music industry. Audio broke free from static fixed formats, suddenly able to achieve compatibility and interoperability across various devices and applications. It can be combined, split, and programmed, creating entirely new products. This has also spawned new hardware devices and streaming business models, greatly benefiting consumers and the American economy.
Just as the digital audio revolution reshaped the music industry, the on-chain securities transition is poised to transform the securities market through entirely new methods of issuance, trading, holding, and usage. For example, on-chain securities can utilize smart contracts to transparently distribute dividends to shareholders on a regular basis; tokenization can also convert relatively illiquid assets into liquid investment opportunities, facilitating capital formation. Blockchain technology is expected to open up numerous innovative application scenarios for securities and cultivate new market activities not yet covered by existing SEC regulations.
To achieve President Trump's vision of 'making the United States the global center for crypto assets,' the SEC must keep pace with innovation and assess whether the existing regulatory framework needs adjustments to accommodate on-chain securities and other crypto assets. Regulations designed for off-chain securities may be incompatible or unnecessary for on-chain assets and could suppress the development of blockchain technology.
A core priority of mine during my tenure is to establish a reasonable regulatory framework for the crypto asset market, creating clear rules for issuance, custody, and trading while continuously curbing illegal activities. Clear rules are crucial to protect investors from fraud—especially in helping them identify illegal scams.
The SEC has entered a new era. Policy-making will no longer be achieved through temporary enforcement actions, but rather by using existing rule-making, interpretive, and exemption authorities to set precise applicable standards for market participants. Enforcement will return to the original intent of congressional legislation—focusing on actions that violate legal obligations, particularly those involving fraud and market manipulation.
This work requires multi-departmental collaboration within the SEC, so I am pleased that Commissioner Uyeda and Commissioner Peirce have jointly established a crypto asset working group. The SEC has long suffered from policy silos, and this working group demonstrates how we can break down departmental barriers to provide the long-awaited policy clarity and certainty to the public.
Next, I will outline the three key areas of crypto asset policy—issuance, custody, and trading.
Issuance
First, I will promote the SEC to establish clear and reasonable guidelines for the issuance of security-type crypto assets or investment contract-type crypto assets. Currently, only four crypto asset issuers have completed financing through registered issuance or Regulation A exemptions. Issuers generally avoid this issuance method, partly because it is difficult to meet the corresponding disclosure requirements. If an issuing entity does not intend to issue traditional securities such as stocks, bonds, or notes, it is also very difficult for the issuing entity to determine whether crypto assets constitute 'securities' or are subject to investment contract constraints.
In recent years, the SEC first adopted what I call an 'ostrich policy'—the fantasy that crypto assets would disappear on their own; then they shifted to a law enforcement model of 'shoot first, ask questions later.' Although they claim to be willing to communicate with potential registrants ('welcome to consult'), it has proven to be a fleeting moment, often misleading—because the SEC has not made the necessary adjustments to registration forms to accommodate new technologies. For example, the S-1 form still requires detailed disclosure of executive compensation and the use of funds, which may be neither relevant nor important for investment decisions in crypto assets. While the SEC has adjusted registration forms for asset-backed securities and real estate investment trusts, it has not taken equivalent measures for crypto assets, which have become increasingly important to investors in recent years. We cannot encourage innovation by 'cutting the shoes to fit.'
I am committed to promoting the SEC to establish new guidelines. The SEC staff recently issued a statement regarding specific registration, issuance, and disclosure obligations, clarifying that certain crypto asset issuances do not involve federal securities laws. I hope the staff will continue to clarify other types of issuances and assets as per my instructions. However, the existing registration exemptions and safe harbor rules may not fully apply to certain crypto asset issuances. I find this reliance on staff statements extremely temporary—the SEC-level action is crucial and necessary, and I have asked the staff to assess whether additional guidance, registration exemptions, and safe harbor rules are needed to open new avenues for crypto asset issuance within the United States. I believe the SEC has ample discretion under the securities law framework to embrace the crypto industry, and I will certainly push for its implementation.
Custody
Secondly, I support granting registration agencies more autonomy in choosing custody methods for crypto assets. The staff recently eliminated a significant barrier for companies offering crypto asset custody services by rescinding Staff Accounting Bulletin No. 121 (SAB-121). That bulletin was a major mistake—staff had no authority to substitute committee action on such a broad scale without notifying the rulemaking process. This move not only caused unnecessary confusion but also had implications far beyond the SEC's authority. However, beyond repealing SAB-121, we can take additional measures to promote competition in the compliant custody services market.
It is necessary to clarify the criteria for identifying 'qualified custodians' under the Investment Advisers Act and the Investment Company Act and to set reasonable exemptions for common operations in the crypto asset market. Many advisers and funds have adopted self-custody solutions that are more advanced than the technologies used by some custodians on the market, providing better asset security. Therefore, custody rules may need updating to allow advisers and funds to self-custody under specific circumstances.
Furthermore, there may be a need to abolish the current 'special purpose broker' framework and establish a more reasonable system. Currently, only two special purpose brokers are operating, clearly due to the significant restrictions imposed by that model. Brokers have never been prohibited from custodying non-security crypto assets or security crypto assets, but SEC action may be needed to clarify the applicable standards for customer protection rules and net capital rules regarding such activities.
Trading
Additionally, I support allowing registration agencies to trade a richer variety of products on platforms according to market demand—these businesses have been prohibited by previous SEC administrations. For example, some brokers have attempted to launch 'super apps' that integrate securities, non-securities, and other financial services. Current securities laws do not prohibit registered brokers with alternative trading systems from providing non-securities trading services, including 'pair trading' of securities and non-securities. I have requested that the staff study how to modernize the ATS regulatory framework to better accommodate crypto assets while assessing whether further guidance or rules are needed to support the listing and trading of crypto assets on national securities exchanges.
In the process of the SEC building a comprehensive regulatory framework, we should not force market participants to go offshore for blockchain innovation. I will explore whether conditional exemptions can be granted to registered and non-registered entities attempting to launch new product services—these innovations may not fully comply with current regulatory requirements.
I look forward to working with colleagues in the Trump administration and Congress to make the United States the best place to participate in the global crypto asset market.
Original Link