Original Title: Keynote Address at the Crypto Task Force Roundtable on Tokenization

Original author: Paul S. Atkins

Original compilation: Azuma, Odaily Planet Daily

Editor's note: On May 12, local time in the United States, the Special Working Group on Crypto Assets under the Securities and Exchange Commission (SEC) held its fourth cryptocurrency roundtable meeting, focusing on the theme of "Tokenization: Asset On-Chain - The Intersection of Traditional Finance and Decentralized Finance." Notably, Paul Atkins, who officially took office as SEC Chairman on April 22, attended the roundtable and delivered a lengthy speech on cryptocurrency for the first time in his capacity as SEC Chairman (Note: At the third meeting, Paul Atkins, who had just been in office for four days, made an opening statement, but it was only a few words).

In his speech, Paul Atkins mentioned that "securities are increasingly migrating from traditional (off-chain) databases to blockchain-based (on-chain) ledger systems. A core priority during his tenure is to establish a reasonable regulatory framework for the crypto asset market, to create clear rules for the issuance, custody, and trading of cryptocurrencies, while continuously curbing illegal activities. Furthermore, the SEC's regulation of cryptocurrencies will no longer rely on controversial enforcement actions but will use existing rule-making authority, interpretive authority, and exemption authority to set precise applicable standards for market participants. Below is the full text of Paul Atkins' speech, translated by Odaily Planet Daily.

Thank you all, good afternoon. I am honored to speak to you distinguished individuals at today's roundtable on tokenization. Thank you to all the panel members for your participation.

The topic discussed this afternoon is timely - securities are increasingly migrating from traditional (also known as 'off-chain') databases to blockchain-based (also known as 'on-chain') ledger systems.

The migration of securities from off-chain systems to on-chain systems is comparable to the evolution of audio recording from vinyl records to cassette tapes and then to digital software several decades ago. Encoding audio into a digital file format that can be easily transmitted, modified, and stored has unleashed tremendous innovative potential for the music industry. Audio has broken free from the shackles of static fixed formats, suddenly enabling compatibility and interoperability across various devices and applications. It can be combined, split, and programmed, creating entirely new products. This has also spawned new types of hardware devices and streaming business models, greatly benefiting consumers and the U.S. economy.

Just as the digital audio revolution has reshaped the music industry, securities on the blockchain are expected to transform the securities market through new methods of issuance, trading, holding, and usage. For example, on-chain securities can use smart contracts to transparently distribute dividends to shareholders periodically; tokenization can also convert relatively illiquid assets into liquid investment opportunities, facilitating capital formation. Blockchain technology is expected to open up a multitude of innovative application scenarios for securities, nurturing new market activities not yet covered by current SEC regulations.

In order to realize President Trump's vision of "making the United States the global center for crypto assets," the SEC must keep pace with innovation and assess whether the existing regulatory framework needs adjustment to accommodate on-chain securities and other crypto assets. Regulations designed for off-chain securities may be incompatible or unnecessary for on-chain assets, and could instead stifle the development of blockchain technology.

My core priority during my term is to establish a reasonable regulatory framework for the cryptocurrency asset market, creating clear rules for issuance, custody, and trading, while continuously curbing illegal activities. Clear rules are crucial for protecting investors from fraud—especially in helping them identify illegal and irregular scams.

The SEC has entered a new era. Policy-making will no longer be achieved through ad hoc enforcement actions, but rather by using existing rule-making authority, interpretive authority, and exemption authority to set precise applicable standards for market participants. Enforcement efforts will return to the original intent of congressional legislation — focusing on combating violations of legal obligations, particularly in cases involving fraud and market manipulation.

This work requires collaboration among multiple departments within the SEC, so I am pleased that Commissioner Uyeda and Commissioner Peirce have jointly established the Cryptocurrency Asset Working Group. For a long time, the SEC has suffered from policy silos, and this working group demonstrates how we can break down departmental barriers to provide the long-awaited policy clarity and certainty to the public.

Next, I will elaborate on the three key areas of cryptocurrency asset policy - issuance, custody, and trading.

Issuance

First, I will urge the SEC to establish clear and reasonable guidelines for the issuance of securities-like crypto assets or investment contract-like crypto assets. Currently, only four crypto asset issuers have completed financing through registered issuance or A-rule exemptions. Issuers generally avoid this method of issuance, partly due to the difficulty in meeting the corresponding disclosure requirements. If the issuing institution does not intend to issue common securities, such as stocks, bonds, or notes, it will also be very difficult for the issuing institution to determine whether the crypto assets constitute "securities" or are subject to investment contracts.

Over the past few years, the SEC has responded with what I call the "ostrich policy" – the illusion that crypto assets will disappear on their own; Later, it shifted to the "shoot first, then question" mode of law enforcement and supervision. **While they claim to be willing to communicate with potential registrants ("welcome to inquire"), this has proven to be short-lived at best, and more often misleading, as the SEC has not made the necessary adjustments to the registration form to accommodate the new technology. For example, Form S-1 still requires detailed disclosure of executive compensation and the use of funds, which may be neither relevant nor material to cryptoasset investment decisions. While the SEC has tweaked registration forms for asset-backed securities and REITs, it has not done the same for crypto assets, which have become increasingly popular with investors in recent years. It is not possible to encourage innovation by "cutting it all and doing it all".

I am committed to driving the SEC to formulate new guidelines. The SEC staff recently released a statement regarding specific registration and disclosure obligations, clarifying that the issuance of certain crypto assets does not involve federal securities laws. I hope the staff will continue to clarify regarding other types of issuances and assets as per my instructions. However, the existing registration exemptions and safe harbor rules may not fully apply to the issuance of certain crypto assets. I believe that this reliance on staff statements is extremely temporary—actions at the SEC level are crucial and necessary, and I have asked the staff to assess whether additional guidance, registration exemptions, and safe harbor rules are needed to open new pathways for the issuance of crypto assets within the United States. I believe the SEC has ample discretion under the securities law framework to accommodate the crypto industry, and I will certainly push for implementation.

Custody

Secondly, I support granting registration agencies more autonomy in choosing custody methods for crypto assets. The staff recently removed a significant barrier for companies providing crypto asset custody services by rescinding "Staff Accounting Bulletin No. 121" (SAB-121). This bulletin was a significant mistake — the staff had no authority to substitute committee actions on such a broad scale without notifying the rules-making process. This move not only caused unnecessary confusion, but its impact also extended far beyond the SEC's jurisdiction. However, aside from repealing SAB-121, we can take further measures to promote competition in the compliant custody services market.

It is necessary to clarify the identification standards for "qualified custodians" under the Investment Advisers Act and the Investment Company Act, and to set reasonable exemptions for common operations in the cryptocurrency asset market. Many advisors and funds have adopted self-custody solutions that are more advanced than the technologies used by some custodial institutions in the market, which can more effectively ensure asset security. Therefore, custodial regulations may need to be updated to allow advisors and funds to engage in self-custody under specific circumstances.

In addition, it may be necessary to abolish the current "special purpose broker" framework and establish a more reasonable system. Currently, there are only two special purpose brokers operating, which clearly stems from the significant restrictions imposed by this model. Brokers have never been prohibited from custodian non-securities crypto assets or securities crypto assets, but SEC action may be needed to clarify the applicable standards of customer protection rules and net capital rules for such activities.

Trading

In addition, I support allowing registered institutions to trade a wider variety of products on the platform based on market demand—these activities were prohibited by previous SEC administrations. For example, some brokers are attempting to launch "super applications" that integrate securities, non-securities, and other financial services. Current securities laws do not prohibit registered brokers with alternative trading systems from providing non-securities trading services, including "pair trading" of securities and non-securities. I have asked staff to study how to modernize the ATS regulatory framework to better accommodate crypto assets, while assessing whether further guidance or rules are needed to support the listing and trading of crypto assets on national securities trading platforms.

In the process of the SEC building a comprehensive regulatory framework, market participants should not be forced to go overseas for blockchain innovation. I will explore whether conditional exemptions can be granted to registered and non-registered entities attempting to launch new products and services—these innovations may not fully comply with existing regulatory requirements.

I look forward to working with colleagues in the Trump administration and Congress to make the United States the best participant in the global cryptocurrency market.

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