SEC Shifts Crypto Policy Towards Rulemaking, Away from Enforcement

The U.S. SEC is aiming to fundamentally shift its approach to cryptocurrency policy, moving away from its previous strategy of “regulation by enforcement” through court actions. 

Agency chair Paul Atkins, in remarks delivered to the Senate Appropriations Subcommittee on Financial Services on June 3, affirmed that the SEC will now prioritize shaping its crypto policies with “notice and comment” rulemaking.

Atkins, a former crypto lobbyist, emphasized that a key priority under his tenure will be the creation of a “rational regulatory framework for crypto assets.” He stated that the commission will leverage its existing authorities to set “fit-for-purpose standards” for the industry. 

This contrasts sharply with the approach of former SEC Chair Gary Gensler, who faced considerable criticism from the crypto industry for allegedly crafting policy primarily through lawsuits and legal settlements. 

He further added that the SEC will establish “clear rules of the road” for the issuance, custody, and trading of cryptocurrencies, simultaneously discouraging illicit activities. 

Crypto Task Force Develops Framework

During the hearing, Democratic Senator Chris Coons inquired whether Atkins would endorse crypto exchanges handling both traditional securities and digital tokens. Atkins stated that the agency’s Crypto Task Force is actively developing regulations “that make sense for the industry and that allow for innovation.” 

This task force, launched on January 21 by acting SEC chair Mark Uyeda, is specifically charged with establishing a workable crypto framework for the agency. Atkins had previously informed lawmakers on May 20 that the task force’s initial report is anticipated within the next few months.

SEC Seeks Congressional Approval to Disband FinHub

Atkins also revealed that he has sought congressional approval to disband the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub), an office established in 2018 to focus on fintech-related fields. Atkins argued that “innovation should be ingrained into the culture SEC-wide and not limited to a relatively small office,” asserting that FinHub’s foundational principles and priorities are now being integrated throughout the regulator. 

Since the departure of former Chair Gensler on January 20, the agency has indeed adopted a notably different stance on crypto, evidenced by the dismissal of several long-running enforcement actions against crypto firms. 

Additionally, SEC has issued guidance on common crypto staking activities, clarifying that they do not violate securities laws, and provided information on how federal securities laws might apply to various crypto assets.