On May 12, 2025, the U.S. SEC once again held a crypto task force roundtable in Washington, DC, with the theme of "Tokenization: Transferring Assets on the Chain, the Intersection of Traditional Finance and Decentralized Finance". SEC Chairman Paul S. Atkins delivered a speech with "Tokenization" as the core content.
The conference focused on how tokenization can bridge traditional finance (TradFi) and decentralized finance (DeFi), the potential of blockchain technology in asset management, capital market efficiency and regulatory frameworks, and compliance, market structure and investor protection issues of tokenized assets (such as real estate and private equity).
The roundtable brought together heavyweight players from the traditional financial and crypto industries, including BlackRock, Fidelity, Nasdaq, Robinhood, Securitize, etc., demonstrating the growing interest and attention of tokenization on Wall Street.
Tokenization is the general trend of the times
“Just as the shift to digital audio revolutionized the music industry, the migration to on-chain securities has the potential to remodel aspects of the securities market by enabling entirely new methods of issuing, trading, owning, and using securities.”
Atkins likened the migration of securities from traditional "off-chain" databases to blockchain "on-chain" systems to the music industry's transition from vinyl records to digital audio. Tokenization brings greater liquidity, transparency and innovation to the securities market through smart contracts, asset segmentation and blockchain technology. Just as digital audio gave rise to streaming and new types of hardware, tokenization may also reshape the way securities are issued, traded and held.
Atkins clearly pointed out that tokenization has the following advantages:
Improved liquidity: Fractionating low-liquidity assets such as real estate or private equity into tokens can attract more investors.
Smart contract automation: Automatically execute dividends or voting to reduce intermediary costs.
New market activities: Supporting new securities usage scenarios and creating more market opportunities.
However, the SEC’s existing rules are mostly designed for traditional securities, which conflict with the characteristics of on-chain assets. If President Trump’s vision of making the United States the “global crypto capital” is to be realized, the SEC must quickly adjust its regulatory framework.
The SEC’s new regulatory direction
In the past, the SEC has experienced the stages of "ostrich policy" and "shoot first and ask questions later" in the regulation of crypto assets. In the early days, the SEC tried to ignore the existence of crypto assets; then it regulated through law enforcement actions, but failed to provide clear guidance. This approach discouraged issuers and hindered innovation. Atkins criticized the SEC for inviting issuers to "come and talk", but because the registration form was not adjusted for crypto assets, the so-called open attitude was in vain.
Atkins promised that the SEC will usher in a "new day" and focus on three major areas: issuance, custody and trading through rulemaking, interpretive guidance and exemption authorities to develop a regulatory framework suitable for crypto assets and abandon the practice of relying on ad hoc enforcement.
issued
“We cannot encourage innovation by trying to fit a square peg into a round hole.”
In his speech, Atkins stressed the urgent need to establish a "rational regulatory framework" to facilitate the migration of securities to the blockchain. In addition, he slammed the SEC's past practice of "regulating by law enforcement" and announced special guidance for the issuance, storage, and trading of crypto assets.
The core issue facing the issuance of crypto assets is: how to determine whether an asset is a "security" or subject to an "investment contract"? Currently, only four issuers have completed registered issuance or Regulation A issuance, and most have avoided it due to complex disclosure requirements. Atkins criticized the SEC for not adjusting the registration form for crypto assets, such as Form S-1 requiring disclosure of executive compensation and use of funds, but this information may not be critical to crypto asset investment decisions.
In fact, as early as the second day after Atkins took office, the SEC issued a non-binding guidance statement, stating: "These issuances and registrations may involve equity or debt securities of issuers related to networks, applications and/or crypto assets. These issuances and registrations may also involve crypto assets that are part of or subject to investment contracts (such crypto assets are referred to as 'underlying crypto assets')." Companies that issue or deal with tokens that may be considered securities are urged to provide detailed disclosures, including business content, token roles, network development milestones, and the rights of token holders.
While the guidance still does not specify which cryptocurrencies are securities, it attempts to provide the industry with a clearer reference framework based on the SEC’s observations of existing company disclosures. In this speech, Atkins further clarified that the SEC will:
Issue clear disclosure guidance clarifying that certain distributions are not subject to securities laws.
Explore new registration exemptions and safe harbors to create pathways for crypto-asset issuance.
Leverage the flexibility of securities laws to support the development of the crypto industry.
Hosting
“That pronouncement was a grave error. The staff had no place to act so broadly in place of Commission action and without notice-and-comment rulemaking.”
Custody is another major bottleneck in the crypto asset market. Currently, only two institutions in the United States have obtained "special purpose broker-dealer" licenses. On January 24 this year, the SEC canceled (Staff Accounting Bulletin No. 121) (SAB 121) and issued SAB 122, officially revoking SAB 121 that prevented banks from custodial cryptocurrencies.
SAB 121 is a guidance issued by the U.S. SEC in 2022, requiring companies holding cryptocurrencies to record these assets on their balance sheets and disclose related risks. The announcement applies to all SEC-regulated entities, especially banks and financial institutions, and may result in them facing higher capital requirements, thereby affecting their ability to provide cryptocurrency custody services. Circle CEO Jeremy Allaire also expressed dissatisfaction with the guidance, believing that SAB 121 "actually imposes penalties on banks, financial institutions, and companies, and even prohibits them from holding crypto assets on their balance sheets."
Related reading: (a16z: 5 principles for crypto asset custody)
Atkins called the elimination of SAB 121 a "correction of a serious mistake". But he believes that eliminating SAB 121 alone is not enough to unlock the market's potential. He proposed the following reforms today:
Clarify “qualified custodian” standards: Provide exemptions for custody practices common in the cryptoasset market.
Support for self-hosting: Allows the use of technologically advanced and secure self-hosting solutions.
Reform the special purpose broker-dealer framework: Replace the existing overly restrictive rules and clarify the role of broker-dealers in the custody of crypto assets.
Atkins has asked SEC staff to explore new paths for cryptocurrency regulation, including studying whether to amend custody rules to allow hedge funds, trading firms and investment advisers to self-custody digital assets.
trade
“Nothing in the federal securities laws prohibits registered broker-dealers with an alternative trading system from facilitating trading in non-securities, including via “pairs trading” between securities and non-securities.”
In the trading space, the SEC has in the past restricted the functions of broker-dealers and trading platforms, such as prohibiting platforms from offering both securities and non-securities trading. Atkins believes that such restrictions are inconsistent with securities law and hinder market innovation. He supports the following reforms:
Allowing for the “super app” model: Supporting broker-dealers to develop platforms that integrate securities, non-securities, and other financial services.
Modernizing Alternative Trading System (ATS) Rules: Adapting rules to accommodate crypto-asset trading.
Support the listing of crypto assets on exchanges: Explore guidance or rulemaking to facilitate the listing and trading of crypto assets.
He also suggested providing "conditional exemptions" for innovative products to encourage the market to test new business models.
Cementing strong ties with the Trump administration and Congress
“I am eager to coordinate with colleagues in President Trump’s Administration and Congress to make the United States the best place in the world to participate in crypto asset markets.”
Atkins succeeds Mark Uyeda, who served as acting chairman since Gensler resigned in January. Uyeda's short tenure under Trump's "crypto-friendly" administration has paved the way for the SEC's transformation, such as withdrawing a number of crypto-related enforcement cases and repealing the internal rule SAB 121 that restricts the custody of crypto assets by listed companies. Atkins' appointment has accelerated the trend of regulatory deregulation. His term will last until June 2026. In more than a year, he may promote important changes in the crypto regulatory policy framework.
To promote reform, Atkins highly praised the Crypto Task Force established by Commissioners Uyeda and Peirce. For a long time, the SEC has been inefficient due to departmental isolation. The Crypto Task Force integrates the resources of multiple departments to provide clarity and certainty to the market, demonstrating a new model of internal collaboration within the SEC.
Atkins emphasized that he will work closely with the Trump administration and Congress to jointly promote the United States as the preferred place for the global crypto asset market. He called on market participants not to transfer innovation overseas, and the SEC will support the development of domestic blockchain technology through a flexible regulatory framework. Tokenization is not only a technological change, but also a historic opportunity to reshape the securities market. Through clear issuance guidelines, flexible custody rules and open trading policies, the SEC is working hard to pave the way for the market.
However, how to balance innovation and investor protection? How to develop long-term rules in a rapidly changing technological environment? These issues require the SEC's continued collaboration with the industry, the public, and the government. Atkins' commitment shows that the SEC is ready to meet the challenge and lay the foundation for the prosperity of the U.S. crypto asset market.
Overall, this speech marks a major shift in the SEC's regulation of crypto assets, aiming to support the development of blockchain technology and tokenized securities through clear rules, promote innovation through reforms in the three major areas of issuance, custody and trading, and pave the way for the United States to achieve its goal of becoming the "global crypto capital". From issuance to custody to trading, the SEC is injecting vitality into the crypto asset market through comprehensive reforms. The establishment of the Crypto Task Force and cooperation with the government further demonstrate that the SEC is embracing the future of blockchain technology with an open and collaborative attitude.
As the wave of tokenization sweeps in, the U.S. securities market may be standing at the starting point of a new era. As Atkins said, this is a "new beginning." What changes will clearer rules, flexible policies and firm support for innovation bring to the U.S. crypto asset market? Let us wait and see.
