SEC Chair Paul Atkins stated that innovation in the cryptocurrency industry has been hindered over the past several years, urging the need for substantial changes. Speaking at a roundtable held by the SEC’s Crypto Task Force, Atkins emphasized that the current regulatory framework is outdated and requires significant attention. This roundtable, which follows the SEC’s recent decision to drop its lengthy lawsuit against Ripple, marks a pivotal moment for the industry, as it suggests a shift from adversarial regulation to a more collaborative approach. The session, attended by crypto leaders and legal experts, primarily focused on custody issues related to digital assets. Atkins expressed openness to reassessing crypto-related rules, highlighting the SEC’s ability to operate flexibly and indicating a willingness to consider congressional input.
The SEC’s shift comes after President Donald Trump’s administration took actions that benefitted the crypto industry, including issuing an executive order to create a strategic bitcoin reserve and pardoning individuals tied to significant crypto exchanges. Trump’s support for the industry continued with the rollback of certain regulatory measures, such as Staff Accounting Bulletin 121, which had blocked institutional adoption of crypto. This move was welcomed by many in the crypto community, including SEC Commissioner Hester Peirce. In addition, the SEC clarified that most meme coins, like Trump’s own $TRUMP token, are not considered securities under U.S. law. The $TRUMP token, launched in January, currently holds a market value of $2.7 billion, with 80% of the supply controlled by the Trump Organization and its affiliates.
Despite these developments, the SEC remains focused on enforcing U.S. rules against foreign companies, including the potential delisting of Chinese firms. At the roundtable, representatives from firms such as Fidelity and Kraken discussed the operational challenges they face in providing crypto custody solutions that comply with federal securities laws. This issue of custody, which refers to how digital assets are held securely, remains complex due to the lack of clear regulatory guidelines. The SEC is revisiting its controversial custody rule, which has faced criticism from the crypto industry. As the SEC seeks to balance investor protection with the realities of decentralized assets, tensions persist over the best approach to securing these assets while ensuring regulatory compliance.
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