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 what I consider a key moment for America to demonstrate 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 views of the SEC or other commissioners.
Today, I want to talk about what I and Commissioner Hester Peirce call the 'Crypto Project,' which will serve as the North Star for the SEC in assisting President Trump in his historic effort to make America the 'global crypto capital.' But before discussing our plans regarding the dominance of the crypto market, I want to reflect on some turning points in the history of capital market development, as they are quite similar to the juncture we are at now, and the future we shape should live up to the legacy we inherit.
01
From the sycamore tree 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 blew the leaves of a sycamore tree—under its shade, more than twenty stockbrokers gathered to sign an agreement that established the precursor to the New York Stock Exchange. That handwritten agreement on parchment, less than a hundred words long, opened the door to an elegant system that has dominated the order of capital flows for generations.
For centuries, our markets have never stood still. They have expanded, evolved, and reshaped with contemporary ideas and technologies. The vibrancy of the market is due to human participation. Markets direct human creativity towards 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 own interests, the market can guide them to serve the public good.
The SEC's responsibility is to protect such a market: allowing human creativity and skills to benefit society. Throughout its history, the SEC has both promoted and, regrettably, stifled innovation. Fortunately, the forces of progress will ultimately prevail. When our regulatory posture can embrace innovation with prudence rather than fear, America's leadership position will always be elevated.
In the 1960s—when I was not yet involved—Wall Street was in a bull market, but the back-end market operations were frequently strained. Most clearing and settlement operations still depended on expensive and cumbersome processes. Mountains of paper stock certificates had to be transported by staff using carts, running 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 gentle era and has clearly struggled to accommodate the rapidly growing transaction volume. Delays in one company can drag down the entire chain; instances of securities being lost or stolen occur frequently; trading failures have surged; and some capital-weak brokerages are even facing bankruptcy due to trading interruptions. In desperation, trading hours have been shortened, and exchanges even close on Wednesdays just to give companies time to handle the mountain of paper certificates.
The then-SEC chairman described this systemic collapse as 'the most severe and enduring crisis in the securities industry in 40 years... corporate bankruptcies, plummeting investor confidence.' It is commendable that the SEC responded actively at the time, driving market participants to establish what we now know as the Depository Trust & Clearing Corporation (DTCC), fundamentally changing the way securities are held and traded.
Thereafter, physical certificates will no longer be needed to circulate between clients and brokerages, or between brokerages. Securities ownership will begin to be recorded electronically. The certificates themselves will be 'frozen' and securely stored in vaults, while ownership will be transferred through computer systems, laying the foundation for today's clearing and settlement systems.
Like this ticker tape next to me, it was a breakthrough in the dissemination of market information at the time, allowing Americans to receive transaction information line by line in real-time. But innovation should not just be about past glory.
By the late 1990s, electronic trading systems were all the rage, shaking many assumptions of traditional market structures. At that time, SEC Chairman Arthur Levitt also believed that the SEC had a responsibility to provide regulatory flexibility for innovation in electronic markets. Thus, in 1999, the (Alternative Trading System Rule) (Reg ATS) was introduced, 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 that can unleash that ambition.
Our regulatory framework should not be fixed in the analog era, refusing to explore new frontiers. After all, the future is accelerating towards us, and the world will not wait for us. America cannot merely catch up to the digital asset revolution; we must lead it.
02
Creating the future: America's leadership in the financial golden age
Today, I want to declare to the world that under my leadership, the SEC will not stand idly by watching innovation flourish 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 migrating our market 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 Project,' an initiative that covers the entire SEC, aimed at modernizing securities regulations so that America's financial markets can fully migrate to on-chain.
Just weeks ago, President Trump signed the (GENIUS Act), establishing the gold regulatory standard for stablecoins in the global payments space. Following the signing, he publicly supported Congress passing crypto market structure legislation within the year. I appreciate the bipartisan support shown by the House in this process and look forward to the Senate further refining the relevant laws to establish a system structure that protects against regulatory overreach and solidifies America's leadership 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 is a blueprint intended to ensure that the U.S. remains at the forefront of blockchain and crypto technology. As the President said last week, he hopes 'the whole world runs on the infrastructure of American technology.' I am ready to help achieve this goal.
Therefore, I initiated the crypto project and instructed the SEC's policy department to work closely with the crypto working group led by Commissioner Peirce to quickly formulate and implement the recommendations of the (PWG report). The crypto project will ensure that America remains the best place in the world for entrepreneurship, developing cutting-edge technologies, and participating in capital markets. We will bring back crypto companies that fled the U.S. due to the previous administration's 'enforcement instead of regulation' policies and 'Operation Chokepoint 2.0.' Whether established companies or newcomers, the SEC welcomes market participants eager to innovate.
03
Bringing crypto assets back to the U.S.: The SEC's new era
The crypto plan will encompass a range of initiatives within the SEC.
First, we will be committed to bringing the issuance of crypto assets back to the U.S. The complex offshore company structures, pseudo-decentralized performances, and the confusion about whether crypto assets are securities will become a thing of the past. President Trump has already indicated that America is in its 'golden age'—and under our new agenda, the crypto asset economy will also enter its golden age.
Based on 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 distance itself from asset issuance, depriving American investors of the opportunity to participate in productive economic activities through this technology. The SEC's long-term avoidance of crypto assets, with a 'shoot first, ask questions later' approach, should be a thing of the past.
Although the SEC's past stance was 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, to be safe, treat all crypto assets as securities. American entrepreneurs are leveraging blockchain technology to modernize various traditional systems and tools. For example, Bernie Moreno, the current U.S. Senator from Ohio and a former entrepreneur, founded a company before his campaign that puts automobile title certificates on the blockchain. He saw the efficiency issues in title transfers 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 commission 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 categorize crypto assets based on these clear criteria, 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.
Additionally, 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 take advantage of the product design flexibility provided by securities laws, and investors will benefit from attributes of securities such as dividends and voting rights. Project parties should not be forced to establish DAOs, create offshore foundations, or decentralize prematurely in 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 do indeed fall under securities law, I have requested staff to propose specialized disclosure requirements, exemption clauses, and 'safe harbor' provisions, 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 persist in this direction, we can usher in an explosion of innovation akin to a Cambrian explosion.
Furthermore, 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., this type of innovation mostly occurs overseas. Meanwhile, our policy department has also received many applications—from well-known Wall Street firms to Silicon Valley unicorns—seeking approval to distribute security tokens in the U.S. I have requested that the commission work with these companies to provide regulatory exemptions in appropriate circumstances, ensuring that the U.S. is not left behind in crypto innovation.
04
Enhancing freedom: providing diversified custody and trading venue choices
Secondly, to achieve the President's goals, the SEC must ensure that market participants have the greatest freedom in choosing custodial and trading platforms. As I have pointed out, the right to own and 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 advisors, who must meet additional regulatory requirements when providing custodial services.
During my tenure, implementing the (PWG report) recommendations regarding the 'modernization of SEC's custodial obligations for registered intermediaries' will be a priority. The previous administration's 'special purpose broker-dealer framework,' the SAB 121 document, and the 'Operation Chokepoint 2.0' have resulted in almost no compliant crypto asset custody service providers in the market today. Existing custody regulations do not take into account the characteristics of crypto assets. I have instructed staff to study how to adapt the current system, including providing exemptions or modifying rules as necessary to promote the development of crypto asset custody services.
(PWG report) also recommends that market participants be allowed to conduct multi-line business under the most effective licensing structure. We cannot force them to be embedded in an outdated 'Procrustean bed' regulatory system. I support allowing them the freedom to choose the regulatory path that best suits their business, provided they protect investor interests.
05
Driving super applications: achieving horizontal integration of products and services
Third, another important goal of my chairmanship is to allow market participants to innovate within the framework of 'super applications.' Many people ask me, 'What is a super application?' It's simple: securities intermediaries should be able to provide a variety of products and services on one platform, under one license. A broker-dealer with an alternative trading system (ATS) should be able to simultaneously offer non-securities crypto asset trading, securities crypto asset trading, traditional securities services, and services such as staking and lending, without needing to apply for more than fifty state licenses or multiple federal licenses.
Currently, federal securities law does not prohibit registered trading platforms from listing non-securities assets. I have instructed commission staff to develop further guidance and plans to promote the implementation of such 'super applications.' Perhaps we will ultimately name it 'Reg Super-App.'
According to the recommendations of the (PWG report), the SEC should collaborate with other regulatory agencies to establish the simplest and most efficient licensing system for registered intermediaries, avoiding multiple regulatory oversight at the same time. This model has been widely adopted in the banking industry, where banks generally do not need to register additionally as broker-dealers or clearing agencies. Regulators should provide regulation in the lowest necessary dose, protecting investors while incentivizing corporate growth. We should not push companies overseas with excessive, paternalistic regulation, nor should we allow regulatory burdens to favor resource-rich large companies, stifling the competitiveness of small and medium-sized enterprises.
According to the specific recommendations of the (PWG report), I have instructed the commission to develop a framework that allows non-securities crypto assets and securities crypto assets to trade in parallel on the same SEC regulatory platform. Additionally, I have requested an evaluation of how to utilize the commission's powers to allow certain crypto assets to be listed on non-SEC registered trading platforms. This will not only allow state-licensed platforms to offer more assets but will also provide margin functionality for CFTC-regulated platforms, even though Congress has not granted them additional authority, which will unleash greater liquidity.
06
Unleashing the potential of the American market: beautiful and powerful on-chain software systems
Fourth, I have instructed the commission staff to update outdated regulatory rules to unleash the potential of on-chain software systems in the U.S. securities market. On-chain software takes many forms—some of these systems are truly decentralized and do not rely on any intermediary to operate; others are maintained by specific operators. Regardless of the form, they should have a place in our financial markets.
Any regulatory framework for the market structure of crypto assets must provide a clear path for on-chain software developers who 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 need regulation in the market, but that does not mean we should force the introduction of intermediaries just to conform to outdated regulatory logic. If the market can operate without intermediaries, we should respect that.
We will leave room for both centralized and decentralized models to develop in the U.S. market. We will protect developers who simply publish software code, clearly delineate the line between intermediary participation and non-intermediary activities, and establish clear and feasible regulatory rules for intermediaries wishing to operate on-chain software systems. DeFi and other on-chain software systems will become part of our securities markets rather than being stifled by redundant or excessive regulation.
To achieve this vision, we need to amend existing rules. For example, to support on-chain trading of securities, we may need to revise the (National Market System Regulation) (Reg NMS). In fact, as early as twenty years ago, I co-wrote a dissenting opinion against Reg NMS with then-commissioner Cynthia Glassman, and today, those concerns seem even more relevant. The excessive requirements imposed by Reg NMS over the past two decades have distorted market activity and hindered the natural evolution of the U.S. securities market. What Congress envisioned back then was to let 'competitive forces, not unnecessary regulation' dominate the development of the national market system. I will work to push us back to this original intention, further promoting innovation and competition in the market.
07
Promoting innovation: commercial viability is our North Star
Finally, innovation and entrepreneurship are the engines of the American economy. President Trump once referred to America as the 'land 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 forward by the industry to stimulate innovation; at the same time, we are exploring the introduction of an 'innovation exemption mechanism' that allows both registered and non-registered entities to quickly bring new business models and services to market, even if these 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. Correspondingly, they will need to adhere to some principle-based conditions to achieve the core policy objectives of federal securities law. These conditions may include commitments to report to the SEC regularly, the introduction of a whitelist or 'certification pool' feature, and allowing only compliant securities tokens (such as ERC3643) to circulate. I encourage market participants to prioritize 'commercial viability' as a core consideration when working with SEC staff to develop models.
08
Summary
While advancing the above priorities, I look forward to collaborating with other government departments to work together to make the U.S. the global crypto capital. This is not just a transformation of regulatory models, but a cross-generational opportunity.
From the paper agreement under the sycamore tree to the electronic ledgers on the blockchain, the winds of innovation continue to blow. Our mission is to keep this wind pushing 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.
Thank you all for listening today. Please pay attention to our upcoming announcements and proposals, and I welcome your valuable suggestions and opinions as always.
Original link: https://a.c1ns.cn/ARUAp