Encryption Regulatory New Chapter: SEC Chairman Paul Atkins Takes Office and Future Outlook

On April 22, 2025, Paul Atkins officially became the 34th chairman of the U.S. Securities and Exchange Commission (SEC). This regulator, known as a "free market advocate," was confirmed by the Senate with a vote of 52 to 44. Unlike his predecessor Gary Gensler, Atkins made it clear from the start of his term that establishing a clear and open regulatory framework for digital assets would be a top priority.

During Gensler's tenure, the SEC took massive enforcement actions against the encryption industry, treating almost all tokens as securities, leaving entrepreneurs, investment institutions, and trading platforms in a long-term state of uncertainty and risk. Against this backdrop, Atkins's appointment is seen by the industry as a "reset moment" for U.S. encryption regulation.

From Traditional Regulators to Encryption Industry Experts

Atkins has a rich background in finance and law. He graduated from Wofford College and Vanderbilt University Law School, and early in his career worked at top law firms on Wall Street, focusing on securities issuance and mergers and acquisitions. In the early 1990s, he joined the SEC as a senior advisor to two former chairmen, concentrating on corporate governance and market structure reform.

In 2002, Atkins was appointed as a commissioner of the SEC. Before stepping down in 2008, he was known for promoting transparent regulation and opposing bureaucratic expansion, being seen as one of the representatives of the American free market regulatory philosophy. In 2009, he founded the compliance consulting firm Patomak Global Partners, providing compliance strategy services for financial institutions and encryption companies.

During the establishment of Patomak, Atkins built strong connections within the encryption industry. He serves as the co-chair of the "Token Alliance" under the U.S. Chamber of Digital Commerce, leading the development of best practices for token issuance and encryption platforms. In addition, he provides strategic consulting for several well-known encryption companies and invests in encryption asset funds. Financial disclosures indicate that his family's encryption-related assets are valued at several million dollars.

These experiences have made Atkins one of the few experts in the encryption industry who possesses both theoretical knowledge and practical experience among traditional regulators. Although his experience providing compliance advice to FTX sparked controversy, the Senate majority ultimately showed support, reflecting a loosening attitude towards encryption regulation in the American political climate.

Regulatory Concept: Guidance Rather Than Suppression

Unlike the regulatory approach of "litigation governance" during the Gensler era, Atkins emphasizes that the SEC's mission should shift from "defining rules through enforcement" to "guiding compliance through rules." He believes that regulation should not be the enemy of innovation, but rather provide clear and enforceable compliance pathways.

Atkins criticized the previous administration's approach of viewing all cryptocurrencies as securities, arguing that it has led the market into a "sue first, find rules later" deadlock. Instead, he prefers to build a more resilient and adaptable regulatory classification system based on dimensions such as token functionality and degree of decentralization. He emphasized that the U.S. should not lose its competitive edge in the Web3 era due to regulatory uncertainty.

Since Atkins was confirmed as the chair, a series of actions by the SEC has made the encryption industry feel the shift in regulatory winds:

1. Launching a dialogue with the encryption industry: The SEC plans to hold four public roundtable meetings covering key topics such as exchange regulation, custody standards, DeFi compliance, and asset tokenization. This marks the SEC's first establishment of a systematic policy consultation mechanism on encryption issues.

2. Large-scale settlements or withdrawals in encryption litigation cases: The SEC's attitude towards existing encryption litigation cases has clearly softened, with several project lawsuits being directly withdrawn. This "correction" stance sends a clear signal: the SEC will retroactively correct the previous excessive enforcement of encryption during the tenure of the former official.

3. Preliminary Formulation of Encryption Disclosure Standards: The SEC's Division of Corporation Finance has released non-binding guidance on the disclosure of information regarding cryptocurrency token offerings, covering project structure, token functions, governance design, development progress, and more. This marks a shift in the SEC's regulatory logic from "post-enforcement" to "pre-guidance."

These directional measures indicate that the SEC, under Atkins' leadership, is moving from "high-pressure regulation" to "transparent governance," returning to its original purpose of serving the market, protecting investors, and encouraging innovation.

Three Key Priorities of the Atkins Encryption New Policy

The industry is generally focused on the key policy direction of the SEC under Atkins, with the current market mainly concentrating on three major areas:

1. Accelerate the legislative work on stablecoins: Atkins supports establishing a basic framework for stablecoins that includes licensing, reserves, information disclosure, etc., and suggests providing state-level exemption channels for small and medium-sized projects. The SEC may gradually withdraw its direct intervention in "non-security stablecoins" and shift the regulatory focus to banking regulatory agencies or legislative bodies.

2. The registration path for compliant exchanges is expected to be opened up: Atkins advocates for the establishment of a dedicated compliance framework for encryption trading platforms, such as allowing registration as an "Alternative Trading System" (ATS) or "crypto-specific broker-dealer." The SEC may coordinate with other regulatory agencies to develop a multi-agency regulatory framework with clearly defined responsibilities.

3. The criteria for token identification will be reshaped: Atkins tends to classify and evaluate based on the functionality of the token and the degree of decentralization. He supports granting startups a 3-year grace period, allowing them to complete the construction of distributed networks without worrying about legal action from the SEC. At the same time, he supports the "issuance is disclosure" principle, which means that as long as the token project provides complete information disclosure at the time of issuance and has a transparent governance structure, it can operate within a compliance framework.

In addition, the newly established internal research group of the SEC is re-evaluating the attributes of mainstream public chain assets, which may open up more varieties for encryption ETFs. On Atkins' first day in office, the SEC quickly approved options trading for the Ethereum spot ETF, sending a supportive signal for the financialization of encryption assets.

Conclusion

Paul Atkins's appointment represents the beginning of a new regulatory cycle for the encryption industry in the United States. If key areas such as stablecoin compliance pathways, exchange registration systems, and legal recognition of tokens can break through during his term, it will reshape the United States' position in the global encryption governance system. More importantly, the change in regulatory logic will release a stronger institutional signal: it is not a reduction in regulation, but rather clearer, more consultative, and more constructive regulation.

For the encryption industry, this is both an opportunity and a challenge. Atkins emphasized that the SEC will continue to crack down on illegal activities such as fraud, insider trading, and market manipulation. The real change lies in clarifying the compliance direction for the industry, providing a more favorable environment for innovation and development.