David Edwards
U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins announced a significant policy pivot on June 3, committing the agency to develop its cryptocurrency regulations through formal notice-and-comment procedures, a departure from the enforcement-heavy strategy employed by his predecessor.
In testimony before the Senate Appropriations Subcommittee on Financial Services, Atkins affirmed that crypto policy under his leadership “will be done through notice and comment rulemaking, not through regulation by enforcement.” He added that the SEC would rely on its existing statutory authorities to craft “fit-for-purpose standards” for market participants operating within the digital asset sector.
The statement marks a clear strategic shift away from the tenure of former Chair Gary Gensler, whose regulatory approach relied heavily on litigation and settlements—a method that drew sustained criticism from the crypto industry.
New Framework and Task Force Efforts
Atkins, a former crypto lobbyist, underscored that creating a rational and structured regulatory framework for digital assets would be a central priority for the agency. He indicated that enforcement actions would focus strictly on violations such as fraud and market manipulation, aligning more closely with congressional intent.
“The commission’s enforcement approach will return to Congress’s original intent, which is to police violations of these established obligations,” Atkins told lawmakers.
Atkins also highlighted the ongoing work of the SEC’s newly formed Crypto Task Force, which was launched in January and is currently developing targeted regulatory proposals. Although he did not directly answer whether crypto exchanges should be allowed to trade both traditional securities and digital tokens, he emphasized that the task force is crafting rules that “make sense for the industry and that allow for innovation.”
A preliminary report from the task force is expected in the coming months.
FinHub to Be Disbanded
In a further restructuring move, Atkins revealed plans to disband the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub), established in 2018 to focus on emerging technologies including fintech and crypto.
“Innovation should be ingrained into the culture SEC-wide and not limited to a relatively small office,” Atkins said. He added that the core principles of FinHub are being integrated into the broader agency structure.
Since Atkins assumed leadership in January, the SEC has de-escalated several enforcement efforts against crypto entities and issued guidance clarifying that common staking activities do not inherently violate securities laws.
Looking Forward
Atkins’ recalibration of the SEC’s approach could introduce greater regulatory clarity to the digital asset space, potentially easing long-standing tensions between the agency and crypto firms. However, his success will hinge on the SEC’s ability to balance investor protection with market innovation while establishing transparent, enforceable rules for crypto issuance, custody, and trading.
