SEC Chair Paul Atkins argues that crypto innovation is hindered by current regulations and pushes for essential changes. A recent roundtable at the SEC discussed custody issues with industry figures, indicating a shift towards collaboration rather than confrontation. Key regulatory adjustments and ongoing debates about the custody rules and meme coin categorisations were also highlighted.
On Friday, SEC Chair Paul Atkins stated at a roundtable that innovation in the cryptocurrency sector has “been stifled for the last several years.” He asserted that the current regulatory framework necessitates a review, citing market reflections on its ineffectiveness. The gathering marked a significant moment, occurring shortly after the SEC’s dismissal of its long-standing lawsuit against Ripple, signalling a potential shift in regulatory relationships with the crypto industry.
Attending the session in DC were industry leaders, regulators, and legal experts focused on custody issues—essentially, how digital assets are securely managed. Atkins, accompanied by SEC Commissioners Caroline Crenshaw, Mark Uyeda, and Hester Peirce, suggested a collaborative regulatory approach over an adversarial one, indicating the SEC’s willingness to reassess existing crypto regulations.
He noted, “It’s always good to have Congress’ input,” while also suggesting that the SEC has the flexibility needed to navigate regulatory adjustments for cryptocurrencies. Interestingly, the role of the crypto market in past political landscapes—aiding President Trump’s election among other things—was hinted at during discussions.
In line with recent regulatory activity, the SEC repealed a prior rule that classified crypto holdings as liabilities for banks, which effectively hindered institutional engagement with digital currencies. Trump had previously made waves with various crypto-related initiatives, including plans for a strategic bitcoin reserve and pardoning crypto figures.
Atkins asserted that the SEC remains vigilant, willing to penalise foreign companies flouting U.S. regulations, which includes potentially delisting non-compliant Chinese firms. He also hinted at the SEC’s more relaxed stance on meme coins not being classified as securities. This could favour initiatives like Trump’s personal meme coin, which reportedly holds a market value around $2.7 billion and sees significant backing from the Trump Organization.
During the roundtable, major firms such as Fidelity Digital Assets and Kraken presented their concerns regarding compliance with existing custody regulations. There’s an evident tension: investors often prefer secure forms of custody, like hardware wallets, yet clear regulatory guidelines remain absent, complicating safety and legality.
Peirce commented on the ongoing revision discussions surrounding the SEC’s controversial custody rule, proposed under former Chair Gensler, which many in the industry believe imposing an unworkable framework for blockchain assets. Amidst these regulatory challenges, the SEC must balance investor protections with the realities of an evolving crypto ecosystem, warning against the risk of obstructing compliant entities from serving their clientele effectively.
