The Future of Crypto Regulation
The recent confirmation of Paul Atkins as Chair of the Securities and Exchange Commission (SEC) marks a pivotal moment for U.S. cryptocurrency regulation. With growing attention on the $3.5 trillion crypto industry, Atkins' leadership could signal a shift in how the SEC approaches enforcement, registration, and policy development around digital assets.
Mark Uyeda had been serving in an interim capacity since January 20, pending Atkins' confirmation.
During his confirmation hearings before the Banking Committee in late March, Atkins made significant statements regarding the regulation of the cryptocurrency industry, and greater clarity is expected to emerge from the SEC shortly, although few specific details about his plans emerged at the hearings.
Web3 Optimism and Political Ties
Web3 advocates have reason to be optimistic about Atkins' tenure as chair, especially considering the substantial political contributions made by major cryptocurrency firms like Ripple, Kraken, and Coinbase, who donated over $10 million to President Trump's inaugural committee on the heels of massive contributions to both parties at all levels in the 2024 election cycle.
The Trump administration's relationship with cryptocurrency extended beyond political donations. Shortly after his election victory in 2016, a memecoin was launched bearing Trump's likeness, symbolizing the growing intersection between politics and the crypto space. The administration also provided guidance stating that "meme coins" were presumptively not securities, a decision we previously wrote about in Meme or Scheme: a Re-Oriented SEC Suggests a Quasi-Safe Harbor for Memecoins:
Among other problems with this pronouncement. . . is the SEC's use of the two-word formulation "meme coin," rather than the much less square, one-word version: "memecoin." I will use memecoin because the two-word version feels to me like writing "rocking" instead of "rockin'" when you are describing music that, in fact, rocks. Also, it's a little bit awkward that President Trump's memecoins have already generated $350 million in profits for the President and his fellow issuers since the Inauguration.
Toward a National Crypto Reserve
Additionally, the administration has established a strategic cryptocurrency reserve, although its supply consists only of forfeited assets so far. Suggestions from President Trump for a broader type of reserve have been met with criticism on multiple grounds, including simply on the basis that the United States should be prioritizing the stockpiling of its own currency. Others have criticized the specific makeup of the basket of currencies proposed by the Trump Administration, including those who argue that a reserve comprised totally of Bitcoin would have more value than any type of basket.
Regardless, the administration's creation of the reserve has been a critical part of its promise to make the United States the "crypto capital of the world."
Atkins' Background and Crypto Credentials
Atkins himself has long been regarded as a market-friendly policymaker. He began his career as a transactional lawyer at Davis Polk & Wardwell and later became an SEC commissioner under the Bush administration, earning a reputation as a staunch free market advocate and regulatory skeptic. He has been the co-chair of the Token Alliance, a cryptocurrency advocacy organization, since 2017. Atkins personally holds approximately $1–6 million in cryptocurrency, according to his own disclosures, and has confirmed that digital assets will be a key focus of his tenure at the SEC.
Departure from the Gensler Era
Atkins' nomination offers the potential for a shift from the current "policymaking by enforcement" approach under SEC Chair Gary Gensler, which has drawn criticism from crypto advocates.
This pivot from strong enforcement has already begun; under the leadership of Acting Chair Mark Uyeda, the SEC has dropped investigations into OpenSea, Robinhood, Coinbase and others. Uyeda has established a "crypto task force" led by Commissioner Peirce, seen by many as the leading crypto policymaker at the SEC.
Atkins' Vision for Crypto Regulation
During the hearings, Atkins pledged to work with fellow commissioners and Congress to establish a "rational, coherent, and principled" regulatory framework for digital assets. Atkins made clear that one of his top priorities will be "to provide a firm regulatory foundation for digital assets." This sentiment reflects Atkins' previous comments about the need for U.S. regulations to evolve to accommodate digital currencies, citing the collapse of FTX as an example of the risks of not adapting.
Rule 195 and the Future of SEC Crypto Regulation
One possible outcome of Atkins' chairmanship is the implementation of a version of the "Rule 195" safe harbor proposal, which would offer blockchain projects a temporary exemption from SEC registration requirements. First proposed by Commissioner Hester Peirce in 2021, this rule would allow certain projects time to mature before being subject to full regulatory oversight.
Regardless of whether Rule 195 is adopted, it is widely expected that the SEC will take action on cryptocurrency regulation in 2025, signaling a potential turning point in how blockchain projects are treated under U.S. securities laws.
Enforcement Isn't Going Away
With Atkins confirmed, many cryptocurrency companies and platforms are expecting a less rigorous enforcement environment than under the Gensler regime.
However, while the SEC may have ended some investigations into specific actors, an entirely hands-off approach seems unlikely. Per Commissioner Peirce:
The statutes already on the books do not allow a free-for-all for products that fall within our jurisdiction. Congress has put parameters in place, and the Commission will apply them. Congress also has given us exemptive authority, and the Commission will use it, as appropriate. Where Congress has directed the Commission to impose requirements on market participants, SEC rules will not let you do whatever you want, whenever you want, however you want. Some of these rules will impose costs and other compliance burdens that some may find irritating, and the Commission will use its enforcement tools when necessary to pursue noncompliance.
Conclusion: Regulation Is Coming, Just Not a Crackdown
There seem to be two key takeaways from the new SEC leadership. First, despite Atkins' reputation as a regulatory skeptic, his comments regarding the cryptocurrency industry in the past suggest that he will propose a comprehensive new regulatory framework — one he believes will "facilitate rather than impede growth." He believes that in this instance, a comprehensive framework would facilitate rather than impede growth. More regulations are probably coming from the SEC soon, perhaps some U.S. equivalent to the European Union's Markets in Crypto-Assets Regulation (MiCA).
Second, the cryptocurrency industry cannot and should not expect the SEC to cease enforcement of applicable laws. Commissioner Peirce's comments above explicitly state as much. Web3 startups will continue to need to diligently maintain compliance with registration requirements where they apply, as well as other SEC rules and regulations, as they continue to grow.
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