America's Leadership in the Digital Finance Revolution
Good afternoon, everyone. Thank you, Norm, for the warm introduction, and thank you for inviting me to attend. I am very pleased to gather with all of you, especially at this crucial moment when I believe the U.S. is showcasing its leadership in the crypto asset market. Before sharing some thoughts, I want to thank the America First Policy Institute for convening this timely discussion. Furthermore, to reassure the compliance team, I must state that the views I express today are solely my own and do not necessarily reflect the position of the SEC or other commissioners.
Today, I want to talk about what Commissioner Hester Peirce and I refer to as the 'Crypto Program', which will become the North Star for the SEC in assisting President Trump in his historic effort to make America the 'global crypto capital'. However, before discussing our plans for leading the crypto market, I want to revisit some turning points in the history of capital market development, as they are quite similar to the juncture we find ourselves in now, and the future we shape should be worthy of the legacy we inherit.
From Sycamore Trees to Blockchain: The Evolution of Capital Markets
The winds of innovation have always swept through our capital markets, sometimes even like a hurricane. In 1792, it stirred the branches of a sycamore tree—under its shade, over twenty stock brokers gathered to sign an agreement that established the precursor to the New York Stock Exchange. That handwritten agreement on sheepskin, barely a hundred words, launched an elegant system that has dominated the order of capital flows for generations.
For centuries, our markets have never stagnated. They have expanded, evolved, and reshaped in response to contemporary ideas and technologies. The vibrancy of the market comes from human participation. Markets channel human creativity toward society's most challenging problems and reward those who develop the most valuable and popular solutions through incentive mechanisms. This is precisely how Adam Smith described the operation of the 'invisible hand': even as people pursue their self-interests, the market can guide them toward serving the public good.
The SEC's responsibility is to protect a market that allows human creativity and skills to benefit society. Throughout its history, the SEC has both fostered innovation and regrettably stifled it. Fortunately, the force of progress will ultimately prevail. When our regulatory posture can embrace innovation with prudence rather than fear, America's leadership will always ascend to new heights.
In the 1960s—when I was not yet involved—Wall Street was in a bull market, but the operations behind the scenes were often tight. Most clearing and settlement processes still relied on expensive and cumbersome procedures. Paper stock certificates piled up, needing to be transported by staff with carts, moving back and forth between Wall Street and financial centers across the U.S.
This paper-based clearing and settlement system was designed for a more temperate era and has clearly struggled to handle the dramatically increasing trading volumes. Delays in processing at a particular company can drag down the entire chain; instances of securities being lost or stolen have occurred frequently; trading failures have surged; some capital-weak broker-dealers have even faced bankruptcy due to trading interruptions. In desperation, trading hours were shortened, and exchanges even closed on Wednesdays just to give companies time to deal with the pile of paper certificates.
The then-SEC Chairman described this systemic collapse as 'the most severe and protracted crisis in the securities industry in 40 years... company bankruptcies and a sharp drop in investor confidence.' It is commendable that the SEC responded actively at that time, prompting market participants to establish what we know today as the National Securities Clearing Corporation (NSCC), fundamentally changing the way securities are held and traded.
From then on, there was no longer a need for paper certificates to circulate between clients and broker-dealers or among broker-dealers. Ownership of securities began to be recorded electronically. The certificates themselves were 'frozen', securely stored in vaults, while ownership was transferred through computer systems, laying the foundation for today's clearing and settlement systems.
Like this ticker tape next to me, which was a breakthrough in the dissemination of market information at the time, allowing Americans to receive trading information line by line in real-time. But innovation should not just be about past glories.
By the late 1990s, electronic trading systems were all the rage, shaking many assumptions of traditional market structures. The then-SEC Chairman Arthur Levitt also believed that the SEC had a responsibility to provide regulatory flexibility for innovations in electronic markets. Thus, in 1999, the (Reg ATS) was launched, allowing these systems to be regulated as broker-dealers rather than traditional exchanges.
This brings us to today—a moment that requires American ambition, a project capable of unleashing that ambition.
Our regulatory framework should not be stuck in the analog era, refusing to explore new frontiers. After all, the future is accelerating toward us, and the world will not wait for us. America cannot merely catch up with the digital asset revolution; we must lead it.
Creating the Future: America's Leadership in the Financial Golden Age
Today, I want to announce to the world that under my leadership, the SEC will not stand by and watch as innovation flourishes overseas while our own capital markets stagnate. To realize President Trump's vision of making America the global crypto capital, the SEC must consider the potential benefits and risks of moving our markets from off-chain to on-chain.
We are standing at a new threshold in the history of capital markets. As I mentioned earlier, today I officially announce the launch of the 'Crypto Program', an initiative covering the entire SEC aimed at modernizing securities regulations to enable a comprehensive transition of America's financial markets to the blockchain.
Just weeks ago, President Trump signed the (GENIUS Act), establishing a gold standard for global payment regulation concerning stablecoins. After signing, he publicly supported Congress in passing crypto market structure legislation within the year. I appreciate the bipartisan support demonstrated by the House during this process and look forward to the Senate further refining the relevant laws to establish a structure that protects against regulatory overreach, solidifying America's dominant position in the global crypto industry.
Yesterday, the President's Digital Asset Market Working Group released the (PWG Report), providing clear recommendations for the SEC and other federal agencies aimed at establishing a framework to maintain America's leadership in the crypto asset market. This report serves as a blueprint intended to ensure that the U.S. remains at the forefront of blockchain and crypto technology. As the President stated last week, he hopes 'the whole world runs on American technological infrastructure.' I am ready to help achieve that goal.
Therefore, I have initiated a crypto program and instructed the SEC's policy department to closely collaborate with the crypto working group led by Commissioner Peirce to quickly develop a plan to implement the recommendations from the (PWG Report). The crypto program will ensure that the U.S. remains the best place in the world for entrepreneurship, developing cutting-edge technology, and participating in capital markets. We will bring back crypto businesses that fled the U.S. due to the previous administration's 'enforcement over regulation' policies and 'Operation Chokepoint 2.0'. Whether established firms or newcomers, the SEC welcomes market participants eager to innovate.
Bringing Crypto Assets Back to America: A New Era for the SEC
The Crypto Program will encompass a series of initiatives within the SEC.
First, we will work to bring crypto asset issuance back to the U.S. The complex offshore company structures, pseudo-decentralized performances, and the confusion over whether crypto assets fall under securities will become things of the past. President Trump has indicated that America is in its 'golden era'—and under our new agenda, the crypto asset economy will also enter its golden era.
According to the recommendations of the (PWG Report), one of my top priorities is to establish a regulatory framework for crypto asset issuance in the U.S. as soon as possible. Capital formation is one of the core missions of the SEC, but for a long time, the SEC has ignored the market's demand for choice and has suppressed crypto-based financing models. This has led the crypto market to gradually drift away from asset issuance, depriving American investors of the opportunity to engage in productive economic activities through this technology. The SEC's long-standing avoidance of crypto assets, characterized by a 'shoot first, ask questions later' approach, should become a thing of the past.
While the SEC's past position has been to treat most crypto assets as securities, in reality, most crypto assets are not securities. However, due to the ambiguous applicability of the 'Howey Test', some innovators have chosen to treat all crypto assets as securities just to be safe. American entrepreneurs are leveraging blockchain technology to modernize various traditional systems and tools. For example, current U.S. Senator from Ohio and former entrepreneur Bernie Moreno founded a company to put automobile titles on the blockchain before his campaign. He recognized the efficiency issues in transferring titles and proposed a practical solution using blockchain technology.
These entrepreneurs need, and should have, a clear set of criteria to help them determine whether their business is subject to securities laws. I have instructed the committee staff to develop clear guidelines to assist market participants in determining whether a crypto asset is a security or constitutes an investment contract. Our goal is to help them classify crypto assets based on these clear standards, such as digital collectibles, digital goods, or stablecoins, and assess the economic substance of their transactions. Through these classifications, market participants can determine whether the issuer has ongoing commitments or obligations, thereby assessing whether the asset constitutes an investment contract.
Furthermore, being classified as a security should not be the original sin of development. We need a regulatory framework that adapts to crypto securities, allowing these products to thrive in the U.S. market. Many issuers will prefer to utilize the product design flexibility provided by securities laws, and investors will benefit from securities attributes such as dividends and voting rights. Project parties should not be forced to establish DAOs, create offshore foundations, or decentralize too early at non-ideal stages. I am excited about new applications of crypto securities in business, such as participating in blockchain consensus mechanisms through tokenized stocks.
Therefore, for those crypto assets that indeed fall under the securities law, I have requested staff to propose specific disclosure regulations, exemption provisions, and a 'safe harbor' system, including for so-called 'initial coin offerings (ICOs)', 'airdrops', and network reward programs. Our goal is to ensure that issuers do not exclude U.S. users due to legal risks but instead choose to include U.S. users in their issuance plans to enjoy legal certainty and a friendly regulatory environment. I believe that as long as we stick to this direction, a Cambrian explosion of innovation is possible.
Additionally, many companies wish to 'tokenize' securities such as common stocks, bonds, and partnership interests, or tokenize securities issued by others. Due to regulatory barriers in the U.S., such innovations mostly occur overseas. At the same time, our policy department has received many applications—from well-known Wall Street firms to Silicon Valley unicorns—seeking approval to distribute security tokens within the U.S. I have instructed the committee to collaborate with these companies to provide regulatory exemptions where appropriate, ensuring that America is not left behind in crypto innovation.
Enhancing Freedom: Providing Diverse Custodial and Trading Venue Choices
Second, to achieve the President's goals, the SEC must ensure that market participants have the utmost freedom when selecting custodial and trading platforms. As I have noted, the right to own and self-manage private property is one of America's core values. I firmly believe that individuals have the right to use self-custody wallets to hold their crypto assets and participate in on-chain activities such as staking. However, some investors will still choose to entrust their assets to SEC-registered intermediaries, such as broker-dealers or investment advisers, which must meet additional regulatory requirements when providing custodial services.
During my term, implementing the recommendations from the (PWG Report) regarding 'Modernizing SEC Custodial Obligations for Registered Intermediaries' will be a priority. The framework for 'special purpose broker-dealers', the SAB 121 document, and 'Operation Chokepoint 2.0' implemented by the previous administration have led to a near absence of compliant crypto asset custodians in the market today. Existing custodial regulations do not take into account the characteristics of crypto assets. I have instructed staff to explore how to adapt the current system, including providing exemptions or modifying rules as necessary to promote the development of crypto asset custodial services.
The (PWG Report) also recommends that market participants be allowed to conduct multi-line businesses under the most effective licensing structures. We cannot force them into an outdated 'Procrustean bed' regulatory system. I support allowing them to freely choose the regulatory path that best suits their business, provided they protect investor interests.
Promoting Super-Apps: Achieving Horizontal Integration of Products and Services
Third, another important goal of my presidency is to allow market participants to innovate within the framework of 'Super-Apps'. Many people ask me, 'What is a Super-App?' It's simple: securities intermediaries should be able to offer a variety of products and services on a single platform, under one license. A broker-dealer with an Alternative Trading System (ATS) should be able to simultaneously provide trading of non-securities crypto assets, securities crypto assets, traditional securities services, as well as staking, lending, and other services, without needing to apply for licenses in over fifty states or multiple federal licenses.
Currently, federal securities laws do not prohibit registered trading platforms from listing non-security assets. I have instructed committee staff to develop further guidance and plans to promote the realization of these 'Super-Apps'. Perhaps we will eventually name it 'Reg Super-App'.
According to the (PWG Report) recommendations, the SEC should collaborate with other regulatory agencies to establish the simplest and most efficient licensing system for registered intermediaries, avoiding dual regulation. This model has been widely adopted in the banking industry, where banks generally do not need to register as broker-dealers or clearing agencies. Regulatory bodies should provide oversight with the minimum necessary dosage, protecting investors while fostering business growth. We should not drive businesses overseas with excessive, paternalistic regulation, nor should regulatory burdens favor resource-rich large companies at the expense of the competitiveness of small and medium-sized enterprises.
Based on the specific recommendations of the (PWG Report), I have instructed the committee to develop a framework that allows non-security crypto assets and security crypto assets to trade in parallel on the same SEC regulatory platform. Additionally, I have requested an assessment of how to use the committee's authority to allow certain crypto assets to be listed on non-SEC registered trading platforms. This will not only enable state-licensed platforms to provide more assets but also offer margin functionality for CFTC-regulated platforms, even though Congress has not yet granted them additional powers, which will unleash greater liquidity.
Unleashing the Potential of the American Market: Beautiful and Powerful On-Chain Software Systems
Fourth, I have instructed the committee staff to update those outdated regulatory rules to unleash the potential of on-chain software systems in the U.S. securities market. On-chain software comes in various forms—some of these systems are truly decentralized and do not rely on any intermediaries to operate; others are maintained by specific operators. Regardless of the form, they should have a place in our financial markets.
Any regulatory framework regarding the market structure of crypto assets must provide a clear path for developers of on-chain software that do not rely on centralized intermediaries. Decentralized finance (DeFi) software systems—such as automated market makers (AMMs)—can facilitate automated, non-intermediated financial market activities. U.S. federal securities law has consistently assumed the presence of intermediaries that require regulation, but that does not mean we should forcibly introduce intermediaries simply to align with outdated regulatory logic. If the market itself can operate without intermediaries, we should respect that.
We will make room for both centralized and decentralized models to develop within the U.S. market. We will protect developers who simply release software code, clearly delineating the boundaries between intermediary participation and non-intermediary activities, and establishing clear and feasible regulatory rules for intermediaries wishing to operate on-chain software systems. DeFi and other on-chain software systems will be an integral part of our securities market, rather than stifled by redundant or excessive regulation.
To achieve this vision, we need to amend existing rules. For instance, to support on-chain trading of securities, we may need to revise the (Reg NMS). In fact, I co-wrote a dissenting opinion against Reg NMS two decades ago with then-Commissioner Cynthia Glassman, and today those concerns seem more relevant. Over the past twenty years, the excessive requirements imposed by Reg NMS have distorted market activities and hindered the natural evolution of the U.S. securities market. Congress envisioned that 'competitive forces, not excessive regulation' would drive the development of the national market system. I will work to push us back to this original intent and further promote innovation and competition in the market.
Driving Innovation: Commercial Viability is Our North Star
Finally, innovation and entrepreneurship are the engines of the American economy. President Trump has called America a 'nation of builders'. Under my leadership, the SEC will encourage this spirit rather than suppress it with red tape and one-size-fits-all rules. The current commission is actively considering some reform proposals put forth by the industry to inspire innovative vitality; at the same time, we are exploring the introduction of an 'innovation exemption mechanism'—to allow registered and non-registered entities to quickly bring new business models and services to market, even if those models do not fully align with existing rules.
In my vision, this innovation exemption mechanism will allow tech pioneers and business innovators to immediately participate in the market without having to comply with cumbersome regulations that are outdated or hinder economic activity. Accordingly, they will need to adhere to some principle-based conditions to achieve the core policy goals of federal securities laws. These conditions may include commitments to report regularly to the SEC, introducing a whitelist or 'certification pool' feature, and allowing only compliant securities tokens (such as those meeting ERC3643 standards) to circulate. I encourage market participants and SEC staff to consider 'commercial viability' as a core consideration when developing models.
Conclusion
While advancing the above priorities, I look forward to collaborating with other government departments to make America the global crypto capital. This is not just a transformation of the regulatory model; it is a cross-generational opportunity.
From the paper agreement under the sycamore tree to electronic ledgers on the blockchain, the winds of innovation continue to blow. Our mission is to ensure that this wind continues to propel America's leadership forward. After all, ladies and gentlemen, we have never been satisfied with following others. We will not stand on the sidelines. We will lead the way. We will build it ourselves. And we will ensure that the next chapter of financial innovation is written in America.