Main Points
- Issuance: Establish clear, fit-for-purpose registration guidelines and potentially revise Form S-1 requirements to accommodate token offerings.
- Custody: Rescind overly broad guidance like SAB 121, clarify “qualified custodian” definitions, and consider safe-harbors for innovative self-custody solutions.
- Trading: Explore conditional exemptive relief for new products, enable registered broker-dealers and ATSs to list both security and non-security tokens, and deter offshore migration of innovation.
- Broader Context: Align SEC rule-making with Congress’s original intent, coordinate across divisions via the Crypto Task Force, and respond to parallel legislative developments.
- Market Impact: Industry players welcome greater certainty as U.S. aims to become the “crypto capital of the planet,” even as enforcement priorities shift away from ad-hoc actions.
1. A “New Day” for SEC Crypto Policy
On May 12, 2025, SEC Chair Paul Atkins opened the agency’s fourth Crypto Roundtable by declaring that “a new day at the SEC” has begun, signaling an explicit move away from the previous era’s reliance on case-by-case enforcement to shape policy. He criticized the former administration’s “patchwork” approach under Chair Gary Gensler as ad hoc and potentially misleading, noting that market participants were left uncertain about the rules governing token issuance, custody, and trading. Atkins emphasized that going forward, the Commission would leverage its existing rule-making and exemptive authorities—rather than unilateral staff pronouncements—to set coherent, forward-looking standards for digital asset markets.
2. Issuance: Crafting Fit-for-Purpose Registration Standards
2.1 Rationalizing Offerings of On-Chain Securities
Atkins highlighted that only four crypto issuers have utilized registered offerings or Regulation A filings, in part because Form S-1’s detailed questions on executive compensation and use of proceeds often do not align with crypto business models. He directed SEC staff to evaluate whether new registration exemptions, safe-harbors, or guidance documents are needed to facilitate on-chain financing while maintaining robust investor protections. This could include:
- Revising Form S-1 and Form S-3 to omit immaterial fields for token issuers.
- Introducing tailored exemptions for token distributions that clearly delineate securities from utility tokens.
- Establishing a digital-asset class registration process, analogous to real estate investment trusts or asset-backed securities.
Such rule-making aims to reduce the administrative burden on innovators and encourage compliant capital formation domestically, countering the off-shoring of token projects.
3. Custody: Fostering Competition and Innovation
3.1 Rescinding SAB 121 and Beyond
One of Atkins’s first acts was to rescind Staff Accounting Bulletin No. 121, a guidance issued under the prior administration that critics argued raised unnecessary hurdles for banks entering crypto custody. He described the bulletin as causing “unnecessary confusion” and “extending beyond the SEC’s jurisdiction,” but made clear that elimination of SAB 121 is only the starting point.
3.2 Defining “Qualified Custodian” for Digital Assets
Atkins stated that the SEC would issue rules clarifying which entities qualify as custodians under the Investment Advisers Act and Investment Company Act, while considering exceptions to accommodate industry-standard practices like multi-signature wallets and decentralized custody protocols. Potential measures include:
- Recognizing self-custody platforms with audited, on-chain proof of reserves.
- Creating a conditional custodial license for technology firms that meet strict operational and cybersecurity standards.
- Carving out safe-harbors for custodial arrangements that can demonstrably protect client assets against fraud and insolvency.
These actions are designed to promote competition, lower costs, and offer market participants a range of custody solutions that reflect technological advances.
4. Trading: Expanding Market Access Within a Regulated Framework
4.1 Conditional Exemptive Relief for Innovative Products
Atkins expressed interest in exploring whether registrants should receive conditional exemptions or pilot-program privileges to list products that may not neatly fit existing rules, such as tokenized derivatives or yield-bearing tokens. This approach would enable the SEC to test new market structures under controlled conditions before fully integrating them into the rulebook.
4.2 Enabling Broker-Dealers and ATSs to List Non-Security Tokens
In line with his push for practical solutions, Atkins proposed allowing registered broker-dealers operating an Alternative Trading System (ATS) to trade tokens not classified as securities—most notably Bitcoin and Ethereum—alongside security tokens, provided they meet robust anti-fraud and market-surveillance requirements. This dual-listing strategy aims to keep liquidity onshore and prevent token projects from migrating to more permissive jurisdictions.
5. Broader Context and Recent Developments
5.1 Legislative Momentum and Industry Engagement
Atkins’s rule-making agenda aligns with several concurrent Congressional efforts to codify standards for stablecoins and digital asset service providers, including bipartisan bills that have gained traction in both the House and Senate. He lauded the establishment of the SEC’s internal Crypto Task Force—coordinated by Commissioners Hester Peirce and Mark Uyeda—as a model for cross-divisional collaboration, replacing past “silos” that hampered coherent policy development.
5.2 Market Reactions and Prospects
Industry groups, exchanges, and blockchain companies responded positively to Atkins’s speech. Several leading digital-asset firms praised the move toward clarity and rule-based governance, noting that regulatory transparency is essential for institutional adoption Axios. Meanwhile, some consumer advocates cautioned that certain exemptions must still uphold stringent anti-fraud measures to protect retail investors.
6. Conclusion: Charting a Stable Course for Crypto Innovation
Paul Atkins’s vision for crypto regulation emphasizes a balanced framework: one that upholds investor protections while adapting to the unique characteristics of on-chain assets. By systematically overhauling issuance, custody, and trading rules through formal rule-making, the SEC under Atkins aims to foster innovation, enhance competition, and solidify the United States’ role as the global leader in digital assets. As these initiatives progress through notice-and-comment periods and potential legislative backing, stakeholders can anticipate a period of unprecedented regulatory evolution—one designed not merely to police but to empower the next generation of blockchain-based financial services.
