SEC Chair looks to ‘future-proof’ overhaul of crypto regulation

Core Viewpoint - The chair of the US Securities and Exchange Commission (SEC), Paul Atkins, is leading an initiative to reform crypto regulations to ensure long-term stability and prevent future administrations from reversing these changes [1][2]. Group 1: Project Crypto Initiative - Atkins announced "Project Crypto" at the Blockchain Association's policy summit, aiming to establish a "plan for crypto market primacy" that evaluates the benefits and risks of transitioning markets from off-chain to on-chain environments [2]. - The SEC staff has been instructed to create proposals to clarify the regulatory status of crypto assets, facilitate traditional financial institutions in holding crypto, and promote the development of comprehensive financial "super-apps" [2]. - Atkins categorized crypto assets into four types: digital commodities, digital collectibles, digital tools, and tokenised securities, with a focus on tokenised securities for future SEC efforts [2][3]. Group 2: Regulatory Focus and Changes - Only tokenised securities will be treated as securities under SEC regulation, with proposed changes to existing rules governing the trading of securities to accommodate on-chain trading of tokenised equities [3]. - Atkins indicated that many current regulations may not be suitable for a tokenised on-chain environment, suggesting a need for reform [4]. Group 3: Industry Reactions - The initiative has received support from the crypto industry, but there are concerns from traditional market players, such as Citadel Securities, which warned that relaxing regulations could disrupt US equity markets by favoring decentralized exchanges [4]. - Atkins has ruled out the possibility of isolating traditional markets from the more volatile crypto market, indicating a desire for integration rather than separation [5].