Paul Atkins, the new Chairman of the United States Securities and Exchange Commission (SEC), made it clear in a round-table discussion on monetization on Monday, that former Chairman Gary Gensler’s “shoot first and ask questions” strategy was over. He stressed that the SEC would no longer impose encryption companies “to move overseas for the use of block chain technology”.
In his preparatory statement, Atkins said: “This is a new day for the SEC and policy development will no longer be the result of ad hoc enforcement operations. Instead, the Commission will use its existing rules to develop, interpret and waive powers to set market-appropriate standards.”
His comments mark the Government's commitment to the former President of the United States, Donald Trump, to relax the rules of encrypted currency and to make the United States the “global capital of encrypted currency”. As a long-standing supporter of encrypted currency, Atkins identified three areas of regulation on which the SEC should focus: issuance, hosting and trading.
Issuance refers to the process by which enterprises create new securities, such as equities and bonds. Gensler maintained that most of the encrypted currency was securities, which formed the basis for a large number of SEC enforcement actions during his tenure. However, since Gensler left SEC and returned to MIT, most of the relevant cases have been abandoned or suspended. Atkins indicated that he was committed to opening a “new path” for the encryption industry and adapting existing rules to its needs.
Atkins supports giving companies “more flexibility to decide how to host encrypted assets”. He expressed appreciation for the repeal of the SAB-121 provision, described by critics as making it more difficult for encryption companies to cooperate with banks. The SEC Guide of March 2022 recommends that any entity that holds encrypted assets on behalf of others place them on the balance sheet as if it owns them. Atkins described the rule as a “serious error”, which “created unnecessary confusion”.
He also mentioned that “the rules of trusteeship may need to be updated so that consultants and funds may in certain circumstances be self-custody”. In addition, the SEC may “remove and replace the `special-purpose brokering' framework with a more rational system”.
Finally, Atkins expressed support for allowing trade in “broader product types”. This may include, for example, allowing brokers to promote transactions in securities and non-securities and other financial services. He said, “I have asked staff to help us design ways to modernize the ATS control system and better accommodate encrypted assets.” In addition, he instructed staff to explore whether further guidance or rule-making was needed to support the listing and trading of encrypted assets on national stock exchanges.