- Paul Atkins says, “most cryptos aren’t securities.”
- The initiative aims to modernize regulations, foster innovation, and “unleash” on-chain software systems in its securities markets, amongst other pro-crypto pledges.
- Atkins wishes to see on-chain software proliferate across the U.S. securities market.
America’s renewed pro-crypto approach is getting a huge boost as the newly appointed head of the U.S. Securities and Exchange Commission, Paul Atkins, announces a remarkable plan to rewrite the rules with “Project Crypto.”
Project Crypto
In an address to the America First Policy Institute (AFPI), Atkins quickly sets the tone and explains that innovation drives capital markets, which themselves adapt, change, evolve, and reinvent themselves to keep up with “the ideas and technologies of their time.”
The SEC’s role is to safeguard the markets and allow innovation to thrive, which it has done. However, he admits that, regretably, the agency has stifled innovation at times.
and a “blueprint” for the SEC and other agencies like the CFTC
Detailing the many antiquated systems and ways of thinking that have changed over the decades, Atkins says this is one such moment for digital assets.
“[…] today I am announcing the launch of “Project Crypto”—a Commission-wide initiative to modernize the securities rules and regulations to enable America’s financial markets to move on-chain.”
With the GENIUS Act now in place for stablecoins, the White House’s newly published 166-page crypto report has given “clear recommendations”, a “blueprint” for the SEC and other agencies like the CFTC, to build frameworks that make the U.S. dominant in crypto asset markets.
So what’s the plan?
Not Securities
Atkins wishes to see the swift establishment of clear regulatory frameworks for crypto asset distribution in the U.S.
“The SEC’s head-in-the-sand posture—as well as its shoot first, ask questions later approach—are days of the past. Despite what the SEC has said in the past, most crypto assets are not securities,” the SEC chief said.
The goal is to categorize crypto assets into clearly defined categories, such as “digital collectibles, digital commodities, or stablecoin,” and then “assess the economic realities of a transaction.”
On top of that, if cryptos are deemed to be securities, there should be frameworks in place for them that let them “flourish” on American markets.
“I have asked staff to propose purpose-fit disclosures, exemptions, and safe harbors, including for so-called ‘initial coin offerings,’ ‘airdrops,’ and network rewards,” Atkins said.
It should be that now, Americans can participate in these distributions, which issuers had avoided, fearing enforcement actions, fines and lawsuits.
When it comes to tokenizing traditional assets, like common stock, bonds, or other securities, firms take this innovation offshore, which, of course, Atkins wishes to see brought back to the States.
Other Plans
Atkins is a proponent of self-custody, as he believes private property is a “core American value.”
“I believe deeply in the right to use a self-custodial digital wallet to maintain personal crypto assets and participate in on-chain activities like staking,” he wrote.
However, investors continue to rely on firms with cumbersome regulatory requirements to hold their assets. A system that he’d like to modernize and adapt for crypto.
“The existing custody rules were created without crypto assets in mind. I have directed the staff to consider how best to adapt the existing regime to facilitate the custody of crypto assets,” Atkins expressed.
“Third,” he says, he wants to see the proliferation of “super-apps,” ones that allow securities intermediaries and broker-dealers to offer trading in non-security crypto assets alongside crypto and traditional securities. This also includes staking and lending services.
“I have directed the Commission staff to develop a framework that will allow non-security crypto assets and crypto asset securities to be traded side-by-side on SEC-regulated platforms,” he added.
This includes having staff evaluate SEC authority to permit such things, and find a solution that could pave the way for CFTC-regulated platforms to offer these products and unlock “greater liquidity for these assets.”
On-Chain Software
Perhaps the biggest surprise amongst all his pledges and plans is his intention to update “antiquated agency rules and regulations” in hopes that it’ll unlock the potential of on-chain software systems in U.S. securities markets.
“Federal securities laws have always assumed the involvement of intermediaries that require regulation, but this does not mean that we should interpose intermediaries for the sake of forcing intermediation where the markets can function without them,” Atkins said.
Instead, he proposes to create space for both models. This means protecting software code publishers and taking a measured approach to “distinguish intermediated and disintermediated activity.”
“Decentralized finance and other forms of on-chain software systems will be part of our securities markets and not drowned out by duplicative or unnecessary regulation,” he asserted.
This will be achieved through some rule changes and amendments to existing regulations.
Innovation First
Atkins is eager to see the digital asset markets flourish, which requires a major policy and attitude shift.
This speech, and these commitments, will “encourage” builders rather than stifle them with “red tape and one-size-fits-all rules.”
The commission is actively taking industry requests and is mulling an innovation exemption that would allow for quick go-to-market for new models and services that would struggle to fit within existing rules.
All in all, America’s crypto golden era is, seemingly, finally here.
