SEC chair promises notice before enforcement for crypto businesses: FT
News Summary
US Securities and Exchange Commission (SEC) Chair Paul Atkins announced the agency is departing from the "enforcement-first" policy towards the crypto industry prevalent during the administration of former President Joe Biden and former SEC Chair Gary Gensler. Atkins told the Financial Times that US cryptocurrency businesses can now expect preliminary notices of technical violations before any agency enforcement actions. He criticized Gensler's past enforcement actions as "not grounded in precedent" and described the approach as "shoot first and then ask questions later." Atkins also distanced himself from Gensler's earlier claims that most cryptocurrencies should be treated as securities, stating most tokens do not fall under securities laws and that he intends to support trading of tokenized stocks and bonds. Since Atkins' confirmation as SEC chair on April 9, 2025, the SEC has created a Crypto Task Force and dropped several crypto-related investigations and enforcement actions undertaken during Gensler’s leadership.
Background
Paul Atkins was confirmed as the new chair of the US Securities and Exchange Commission (SEC) on April 9, 2025, following a US Senate vote. This appointment signals a significant shift in the agency's regulatory approach compared to the previous SEC leadership under Gary Gensler during the period prior to Donald J. Trump's re-election. Under Gensler's leadership, the SEC pursued an aggressive "regulation by enforcement" strategy against the crypto industry, initiating lawsuits against major companies such as Ripple Labs, Terraform Labs, Binance, Coinbase, and Kraken. These cases cost the industry billions in legal fees and drew widespread criticism for a lack of clear guidance. Atkins' statements now herald a return to a more industry-friendly regulatory stance for digital assets in the US, consistent with the incumbent Trump administration's agenda.
In-Depth AI Insights
What are the core strategic motivations behind the SEC's policy shift? Is this merely a regulatory adjustment, or does it reflect deeper economic and political objectives? - This transcends a mere regulatory adjustment, serving as a key manifestation of the Trump administration's "America First" and deregulation agenda within the digital asset sphere. The core strategic motivation is to attract crypto innovation and capital back to the US by reducing regulatory uncertainty and litigation risk, thereby solidifying America's leadership in the global digital economy. This move likely aims to position the US as a more attractive jurisdiction for blockchain technology and Web3 development, countering proactive regulatory frameworks emerging in other nations. - On a political level, this move likely seeks to fulfill President Trump's pro-business and innovation-supportive promises, especially given the crypto industry's large and growing voter base. By easing the burden on the industry, the administration may aim to stimulate economic activity and job creation, while avoiding being perceived as stifling nascent technologies. How might this policy change impact capital flows and the investment landscape for the crypto industry? Are there new risks or opportunities emerging? - Regarding capital flows, a clearer and more predictable regulatory environment will significantly reduce investor risk premiums, potentially attracting more institutional investors and venture capital into the US crypto market. This could accelerate industry maturation and mainstream adoption. Projects and businesses that previously avoided the US due to regulatory concerns may now reconsider their presence. - New opportunities arise from the explicit support for tokenized stocks and bonds, which provides institutional backing for the convergence of traditional financial assets and blockchain technology. This could unlock a multi-trillion-dollar tokenized market, creating immense opportunities for infrastructure providers, compliance solution developers, and platforms specializing in compliant digital securities. - However, risks also emerge. A more lenient regulatory stance might attract lower-quality or potentially fraudulent projects. Without sufficient proactive vetting, a major risk event could damage the industry's reputation and potentially trigger a new wave of regulatory tightening. The vague definition of "most tokens are not securities," without clear legislative guidance, could still lead to disputes in individual cases. What does Atkins' stance that "most cryptocurrencies are not securities," combined with his intent to support tokenized stocks and bonds, signify for the convergence of traditional finance and crypto markets? - This indicates the SEC is pursuing a pragmatic and differentiated approach to digital assets, rather than a blanket classification. Excluding most utility or decentralized tokens from securities classification helps preserve the innovative space and decentralized ethos of the crypto market, preventing over-regulation from stifling its growth. - Concurrently, supporting tokenized stocks and bonds clearly signals the SEC's commitment to ushering traditional assets onto the blockchain. This suggests the SEC recognizes the potential of blockchain technology to enhance efficiency, transparency, and reduce costs within mature financial markets. This foreshadows increased willingness from traditional financial institutions to explore and deploy blockchain solutions, accelerating the deep integration of traditional finance and crypto technologies, effectively blurring the lines between them. In the long run, this could lead to a hybrid market structure where traditional assets are traded in tokenized form, and native crypto assets evolve under a more defined framework.