Paul Atkins has taken the reins at the SEC and it will be a new day for crypto markets.
Grygo is the chief content officer for FTF & FTF News.
The smoke has cleared, the U.S. Senate confirmation process is over, and the swearing-in ceremony is part of history. There is a new sheriff in town, and SEC Chairman Paul S. Atkins made several things clear on May 19 when he made remarks before the “SEC Speaks” conference.
Atkins provided a quick and useful history of the SEC’s role in bolstering innovation for the securities-trading industry over many decades. He wasted no time getting to the way his predecessor handled the emergence of cryptocurrencies.
“This brings me to today. The crypto markets have been languishing in SEC limbo for years,” Atkins says.
The new SEC chairman argues that the regulator’s first crypto strategy was “what I call the ‘head-in-the-sand’ approach—perhaps hoping that crypto would go away. Then, it pivoted and pursued a shoot-first-and-ask-questions-later approach of regulation through enforcement. The “just come in to visit” entreaty often meant coming home to a subpoena. It seemed like a catch-22 for market participants. This environment did not create trust.”
The true message of the SEC at that time “was, ‘You go figure it out.’ That is a fine approach if the regulator plays an active role in interacting with the marketplace to encourage solutions and adapt existing rules and practices if the existing approaches are inapposite to new developments in technology,” Atkins says. “Old ways of doing things should not be immutable, especially if Congress has granted an agency discretion to make changes consistent with Congressional intent and in the public interest. While the SEC must be faithful to its statutes in any effort to be innovative, it should use its available authority and discretion to adapt to and accommodate new developments.”
The prior SEC administration failed in its efforts “to talk to prospective registrants … because the SEC made no adaptations to registration forms or other regulatory requirements to accommodate this new technology,” Atkins says. “I have been told that market participants would in good faith enter what they thought were policy meetings with Commission staff only to receive enforcement inquiries shortly after their meeting.”
In addition, Atkins says that prior SEC leaders stopped staff members “from communicating with market participants when complicated legal questions arose. I am pleased to announce that I recently directed Division of Corporation Finance staff to maintain transparent interactions with the public. When staff is allowed to talk openly with industry, market participants can move more nimbly and allocate capital to productive uses.”
Atkins has taken action to back up the rhetoric.
Paul Atkins
“It is a new day at the SEC. While I have directed Commission staff across our policy Divisions to begin drafting rule proposals related to crypto, the staff continue to “clear the brush” through staff-level statements,” Atkin says. “For example, last week, the staff of the Division of Trading and Markets issued a set of FAQs that addressed broker-dealer and transfer agent questions. While the views of the staff are not rules or regulations of the Commission, they can provide useful insights for the public. Ultimately, the Commission is, of course, responsible and must itself squarely address these issues to ensure that the public has clear rules of the road.”
He also reiterated an ambitious policy goal for cryptocurrency and securities transactions.
“Last, as I mentioned at a recent Crypto Task Force roundtable, I would like the Commission to allow SEC registrants to custody and trade both securities and non-securities under one roof,” Atkins says. “Enabling this reality could reduce costs for investors while allowing non-security trading to enter a regulated environment at the federal level expeditiously. This would be an initial step towards the possibility of eventually achieving a ‘super-app’ reality.”
The task force is moving full speed ahead and is likely to yield ideas and lively discussions as the SEC ventures into this new era.
“As I begin my tenure as Chairman, I can tell you that we are getting back to our roots of promoting, rather than stifling, innovation. The markets innovate, and the SEC should not be in the business of telling them to stand still,” Atkins says.
The full text of Atkins’ speech can be found here: https://shorturl.at/Azugj
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