Keynote Address At The Crypto Task Force Roundtable On Tokenization, Paul S. Atkins, SEC Chairman, Washington D.C., May 12, 2025

Thank you and good afternoon. I am delighted to speak to this distinguished group at today’s roundtable on tokenization.[1] Thank you to the panelists for participating today.

The topic of this afternoon’s discussion is timely as securities are increasingly migrating from traditional (or “off-chain”) databases to blockchain-based (or “on-chain”) ledger systems.

This movement of securities from off-chain to on-chain systems is akin to the transition of audio recordings from analog vinyl records to cassette tapes to digital software decades ago. The ability to easily encode audio in a digital file format, which could readily be transferred, modified, and stored, unlocked tremendous innovation within the music industry.[2] Audio was freed from its boundaries as a static, fixed-format creation. It suddenly was compatible and interoperable across a wide range of devices and applications. It could be combined, broken apart, and programmed to form entirely new products. This also led to the development of novel hardware devices and streaming content business models, greatly benefiting consumers and the American economy.[3]

Just as the shift to digital audio revolutionized the music industry, the migration to on-chain securities has the potential to remodel aspects of the securities market by enabling entirely new methods of issuing, trading, owning, and using securities. For example, on-chain securities can utilize smart contracts to transparently distribute dividends to shareholders on a regular cadence. Tokenization can also enhance capital formation by transforming relatively illiquid assets into liquid investment opportunities. Blockchain technology holds the promise to allow for a broad swath of novel use cases for securities, fostering new kinds of market activities that many of the Commission’s legacy rules and regulations do not contemplate today.

In order for the United States to be the “crypto capital of the planet” as envisioned by President Trump,[4] the Commission must keep pace with innovation and consider whether regulatory changes are needed to accommodate on-chain securities and other crypto assets. Rules and regulations designed for off-chain securities may be incompatible with or unnecessary for on-chain assets and stifle the growth of blockchain technology.

A key priority of my Chairmanship will be to develop a rational regulatory framework for crypto asset markets that establishes clear rules of the road for the issuance, custody, and trading of crypto assets while continuing to discourage bad actors from violating the law. Clear rules of the road are necessary for investor protection against fraud – not the least to help them identify scams that do not comport with the law.

It is a new day at the SEC. Policymaking will no longer result from ad hoc enforcement actions. Instead, the Commission will utilize its existing rulemaking, interpretive, and exemptive authorities to set fit-for-purpose standards for market participants. The Commission’s enforcement approach will return to Congress’ original intent, which is to police violations of these established obligations, particularly as they relate to fraud and manipulation.

This undertaking requires coordination across multiple offices and divisions within the Commission, which is why I am pleased that Commissioner Uyeda and Commissioner Peirce have worked together to establish the Crypto Task Force. For too long, the Commission has been plagued by policymaking siloes. The Crypto Task Force exemplifies how our policy divisions can come together to expeditiously provide long-needed clarity and certainty to the American public.

Now, I mentioned three areas of focus for crypto asset policy – issuance, custody, and trading.

Issuance

First, I intend for the Commission to establish clear and sensible guidelines for distributions of crypto assets that are securities or subject to an investment contract. Only four crypto asset issuers have conducted registered offerings and offerings pursuant to Regulation A.[5] Issuers have largely avoided these types of offerings, in part, due to challenges in satisfying the associated disclosure requirements. In cases where the issuer does not intend to distribute ordinary securities, such as stock, bonds, or notes, issuers also struggle to determine whether a crypto asset constitutes a “security” or is subject to an investment contract.[6]

In the past few years, the SEC first pursued what I call the “head-in-the-sand” approach – perhaps hoping that crypto would go away. Then, it pivoted and pursued a shoot-first-and-ask-questions-later approach of regulation through enforcement. It claimed that it was willing to talk to prospective registrants, “Just come in to visit,” but this proved ephemeral at best and more often misleading because the SEC made no necessary adaptations to registration forms for this new technology. For example, Form S-1 continues to require detailed information regarding executive compensation and use of proceeds, which may not be relevant or material for investment decisions in crypto assets. While the SEC has previously adapted its forms for offerings of asset-backed securities and by real estate investment trusts, it has not done so for crypto assets despite increased investor interest in this space over the past few years. We cannot encourage innovation by trying to fit a square peg into a round hole.

I am committed to the Commission charting a new course. The Commission staff recently issued a staff statement on disclosure obligations for certain registrations and offerings.[7] The staff also clarified the view that certain distributions and crypto assets do not implicate the federal securities laws, and I expect the staff to continue to provide clarifications at my direction with regard to other types of distributions and assets.[8] However, existing registration exemptions and safe harbors may not be entirely fit-for-purpose for certain types of crypto asset offerings. I view this construct of staff pronouncements as extremely temporary – Commission action is both vital and necessary.  In the meantime, I have asked the Commission staff to consider whether additional guidance, registration exemptions, and safe harbors are needed to create pathways for crypto asset issuances within the United States. I believe that the Commission has broad discretion under the securities acts to accommodate the crypto industry, and I intend to get it done.

Custody

Second, I support providing registrants with greater optionality in determining how to custody crypto assets. Commission staff recently removed a significant impediment for companies seeking to provide crypto asset custodial services by rescinding Staff Accounting Bulletin No. 121.[9] That pronouncement was a grave error. The staff had no place to act so broadly in place of Commission action and without notice-and-comment rulemaking. The action created needless confusion and went far beyond the jurisdiction of the SEC in its effects. However, the SEC can do much more to enhance competition in the market for legally compliant custodial services than merely getting rid of SAB 121.

It is important to provide clarity on the types of custodians that qualify as a “qualified custodian” under the Advisers Act and Investment Company Act, as well as reasonable exceptions from the qualified custody requirements to accommodate certain common practices within crypto asset markets. Many advisers and funds have access to self-custodial solutions that incorporate more advanced technology to safeguard crypto assets as compared to some of the custodians in the market. Consequently, the custody rules may need to be updated to allow advisers and funds to engage in self-custody under certain circumstances.

Additionally, it may be necessary to repeal and replace the “special purpose broker-dealer” framework[10] with a more rational regime. Only two special purpose broker-dealer are in operation today due clearly to the significant limitations imposed on these entities. Broker-dealers are not and never were restricted from acting as a custodian for non-security crypto assets or crypto asset securities, but Commission action may be needed to clarify the application of the customer protection and net capital rules to this activity.

Trading

Third, I am in favor of allowing registrants to trade a broader variety of products on their platforms and in response to market demand, activities which previous Commissions had prevented. For example, some broker-dealers seek to go to market with a “super app” that offers trading in securities and non-securities and other financial services all under a single roof. Nothing in the federal securities laws prohibits registered broker-dealers with an alternative trading system from facilitating trading in non-securities, including via “pairs trading” between securities and non-securities. I have asked the staff to help us devise ways to modernize the ATS regulatory regime to better accommodate crypto assets. Additionally, I have asked the staff to explore whether further guidance or rulemaking may be helpful for enabling the listing and trading of crypto assets on national securities exchanges.

While the Commission and its staff work to develop a comprehensive regulatory framework for crypto assets, securities market participants should not be compelled to go offshore to innovate with blockchain technology. I would like to explore whether conditional exemptive relief would be appropriate for registrants and non-registrants that seek to bring new products and services to market that may otherwise not be compatible with current Commission rules and regulations.

I am eager to coordinate with colleagues in President Trump’s Administration and Congress to make the United States the best place in the world to participate in crypto asset markets.

Thank you for your attention. I look forward to the discussions to follow.

 

This movement of securities from off-chain to on-chain systems is akin to the transition of audio recordings from analog vinyl records to cassette tapes to digital software decades ago. The ability to easily encode audio in a digital file format, which could readily be transferred, modified, and stored, unlocked tremendous innovation within the music industry.[2] Audio was freed from its boundaries as a static, fixed-format creation. It suddenly was compatible and interoperable across a wide range of devices and applications. It could be combined, broken apart, and programmed to form entirely new products. This also led to the development of novel hardware devices and streaming content business models, greatly benefiting consumers and the American economy.[3]

Just as the shift to digital audio revolutionized the music industry, the migration to on-chain securities has the potential to remodel aspects of the securities market by enabling entirely new methods of issuing, trading, owning, and using securities. For example, on-chain securities can utilize smart contracts to transparently distribute dividends to shareholders on a regular cadence. Tokenization can also enhance capital formation by transforming relatively illiquid assets into liquid investment opportunities. Blockchain technology holds the promise to allow for a broad swath of novel use cases for securities, fostering new kinds of market activities that many of the Commission’s legacy rules and regulations do not contemplate today.

In order for the United States to be the “crypto capital of the planet” as envisioned by President Trump,[4] the Commission must keep pace with innovation and consider whether regulatory changes are needed to accommodate on-chain securities and other crypto assets. Rules and regulations designed for off-chain securities may be incompatible with or unnecessary for on-chain assets and stifle the growth of blockchain technology.

A key priority of my Chairmanship will be to develop a rational regulatory framework for crypto asset markets that establishes clear rules of the road for the issuance, custody, and trading of crypto assets while continuing to discourage bad actors from violating the law. Clear rules of the road are necessary for investor protection against fraud – not the least to help them identify scams that do not comport with the law.

It is a new day at the SEC. Policymaking will no longer result from ad hoc enforcement actions. Instead, the Commission will utilize its existing rulemaking, interpretive, and exemptive authorities to set fit-for-purpose standards for market participants. The Commission’s enforcement approach will return to Congress’ original intent, which is to police violations of these established obligations, particularly as they relate to fraud and manipulation.

This undertaking requires coordination across multiple offices and divisions within the Commission, which is why I am pleased that Commissioner Uyeda and Commissioner Peirce have worked together to establish the Crypto Task Force. For too long, the Commission has been plagued by policymaking siloes. The Crypto Task Force exemplifies how our policy divisions can come together to expeditiously provide long-needed clarity and certainty to the American public.

Now, I mentioned three areas of focus for crypto asset policy – issuance, custody, and trading.

Issuance

First, I intend for the Commission to establish clear and sensible guidelines for distributions of crypto assets that are securities or subject to an investment contract. Only four crypto asset issuers have conducted registered offerings and offerings pursuant to Regulation A.[5] Issuers have largely avoided these types of offerings, in part, due to challenges in satisfying the associated disclosure requirements. In cases where the issuer does not intend to distribute ordinary securities, such as stock, bonds, or notes, issuers also struggle to determine whether a crypto asset constitutes a “security” or is subject to an investment contract.[6]

In the past few years, the SEC first pursued what I call the “head-in-the-sand” approach – perhaps hoping that crypto would go away. Then, it pivoted and pursued a shoot-first-and-ask-questions-later approach of regulation through enforcement. It claimed that it was willing to talk to prospective registrants, “Just come in to visit,” but this proved ephemeral at best and more often misleading because the SEC made no necessary adaptations to registration forms for this new technology. For example, Form S-1 continues to require detailed information regarding executive compensation and use of proceeds, which may not be relevant or material for investment decisions in crypto assets. While the SEC has previously adapted its forms for offerings of asset-backed securities and by real estate investment trusts, it has not done so for crypto assets despite increased investor interest in this space over the past few years. We cannot encourage innovation by trying to fit a square peg into a round hole.

I am committed to the Commission charting a new course. The Commission staff recently issued a staff statement on disclosure obligations for certain registrations and offerings.[7] The staff also clarified the view that certain distributions and crypto assets do not implicate the federal securities laws, and I expect the staff to continue to provide clarifications at my direction with regard to other types of distributions and assets.[8] However, existing registration exemptions and safe harbors may not be entirely fit-for-purpose for certain types of crypto asset offerings. I view this construct of staff pronouncements as extremely temporary – Commission action is both vital and necessary.  In the meantime, I have asked the Commission staff to consider whether additional guidance, registration exemptions, and safe harbors are needed to create pathways for crypto asset issuances within the United States. I believe that the Commission has broad discretion under the securities acts to accommodate the crypto industry, and I intend to get it done.

Custody

Second, I support providing registrants with greater optionality in determining how to custody crypto assets. Commission staff recently removed a significant impediment for companies seeking to provide crypto asset custodial services by rescinding Staff Accounting Bulletin No. 121.[9] That pronouncement was a grave error. The staff had no place to act so broadly in place of Commission action and without notice-and-comment rulemaking. The action created needless confusion and went far beyond the jurisdiction of the SEC in its effects. However, the SEC can do much more to enhance competition in the market for legally compliant custodial services than merely getting rid of SAB 121.

It is important to provide clarity on the types of custodians that qualify as a “qualified custodian” under the Advisers Act and Investment Company Act, as well as reasonable exceptions from the qualified custody requirements to accommodate certain common practices within crypto asset markets. Many advisers and funds have access to self-custodial solutions that incorporate more advanced technology to safeguard crypto assets as compared to some of the custodians in the market. Consequently, the custody rules may need to be updated to allow advisers and funds to engage in self-custody under certain circumstances.

Additionally, it may be necessary to repeal and replace the “special purpose broker-dealer” framework[10] with a more rational regime. Only two special purpose broker-dealer are in operation today due clearly to the significant limitations imposed on these entities. Broker-dealers are not and never were restricted from acting as a custodian for non-security crypto assets or crypto asset securities, but Commission action may be needed to clarify the application of the customer protection and net capital rules to this activity.

Trading

Third, I am in favor of allowing registrants to trade a broader variety of products on their platforms and in response to market demand, activities which previous Commissions had prevented. For example, some broker-dealers seek to go to market with a “super app” that offers trading in securities and non-securities and other financial services all under a single roof. Nothing in the federal securities laws prohibits registered broker-dealers with an alternative trading system from facilitating trading in non-securities, including via “pairs trading” between securities and non-securities. I have asked the staff to help us devise ways to modernize the ATS regulatory regime to better accommodate crypto assets. Additionally, I have asked the staff to explore whether further guidance or rulemaking may be helpful for enabling the listing and trading of crypto assets on national securities exchanges.

While the Commission and its staff work to develop a comprehensive regulatory framework for crypto assets, securities market participants should not be compelled to go offshore to innovate with blockchain technology. I would like to explore whether conditional exemptive relief would be appropriate for registrants and non-registrants that seek to bring new products and services to market that may otherwise not be compatible with current Commission rules and regulations.

I am eager to coordinate with colleagues in President Trump’s Administration and Congress to make the United States the best place in the world to participate in crypto asset markets.

Thank you for your attention. I look forward to the discussions to follow.