Open Public Rulemaking to Guide Crypto Regulation
Securities and Exchange Commission Chairman Paul Atkins told a Senate subcommittee on June 3 that the agency will pursue cryptocurrency regulation through “notice and comment” rulemaking, a sharp departure from past enforcement-focused methods.
“The commission will leverage its current authorities to set fit-for-purpose standards for market participants,” Atkins stated, prioritizing predictability and transparency in policy-making.
A Shift Away from the Gensler Style
Atkins’ statement represents a shift in strategy away from the approach of previous Chair Gary Gensler, who was repeatedly criticized for regulating crypto through enforcement actions rather than printed-up rules.
Atkins vowed that enforcement would once again play its historical role—punishing violations of known rules, not creating policy through the courts. “The commission’s approach to enforcement will revert back to Congress’s original intent,” he stated, “especially with regard to fraud and manipulation.”
Clear Standards for Crypto Markets
The SEC under Atkins also plans to issue comprehensive rules on crypto issuance, which includes custody and trading. These “rules of the road” will strive to provide balance between investor protection and innovation.
“Clear rules are necessary to protect investors’ from fraud—not least in order to allow them to identify scams that do not operate according to the law,” Atkins added.
When asked if crypto exchanges should handle both fiat and digital assets, Atkins dodged, stating the SEC’s Crypto Task Force is working on regulations that “make sense for the industry.”
Crypto Task Force and FinHub Overhaul
Atkins also stated that the SEC’s Crypto Task Force, which was created earlier this year, will publish its first report later in the months to come. The task force will most likely play a leading part in crafting a reasonable regulatory framework.
Meanwhile, Atkins is seeking legislative authorization for the winding down of FinHub, the SEC’s Strategic Hub for Innovation and Financial Technology.
“Innovation must be integrated into SEC-wide culture and not limited to a relatively small office,” he said. FinHub’s central functions, Atkins said, are being folded into broader agency operations.
Post-Gensler Reforms Are Already Underway
Since January’s departure of Gensler, the SEC has adopted a very different tone. It has put on hold several high-profile enforcement actions against crypto firms and issued guidance clarifying the legal status of crypto staking.
Atkins’ testimony is a step towards stability and legitimacy of crypto regulation, premised on open guidance and public consultation.
