The Securities and Exchange Commission (SEC) plans to set new rules on crypto regulation assets in relation to trading, issuance, and custody processes. Chairman Paul Atkins reaffirmed that the SEC will exercise formal rulemaking and not enforcement when making crypto policy. This move is aimed at ensuring that market players operate in a constant regulatory environment and have minimum legal uncertainty.
Crypto Regulation Aims to Protect Investors
The SEC will prioritize drafting clear guidelines for issuing crypto assets classified as securities or linked to investment contracts. This change seeks to prevent confusion over compliance obligations and ensure issuers meet regulatory standards from the outset. Clearer policies will help startups and established firms avoid enforcement actions while encouraging innovation in blockchain technology.
Chairman Paul Atkins' remarks at the Crypto Task Force roundtable on tokenization:
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.
— U.S. Securities and Exchange Commission (@SECGov) May 12, 2025
Paul Atkins stated that crypto markets need reliable rules for growth and transparency, including tailored rules for digital asset distributions. These rules define when tokens are securities and what disclosures must accompany their launch. Consequently, crypto firms will have a roadmap to raise capital without fear of retroactive legal enforcement.
Regulators also want to prevent misleading promotions that confuse investors about token characteristics and risks. With transparent issuance rules, projects will have to justify token classifications. This move supports investor protection, especially in markets where speculation often overshadows legal obligations.
Crypto Asset Custody Flexibility to Expand
The SEC plans to give registrants more flexibility in managing custody of crypto assets under their control. Current custody requirements are often too restrictive or incompatible with blockchain-based systems. Atkins believes updated standards will help U.S. companies keep innovation onshore.
The commission is expected to use its exemptive powers to allow alternative custody models that meet investor protection and operational efficiency goals. Registered entities could soon have legal pathways to explore multi-party computation or smart contract-based custody. When properly regulated, these methods may prove more secure and transparent than legacy systems.
Furthermore, regulators will clarify who can serve as a qualified custodian and how asset segregation must occur. Clear crypto regulation in custody could drive institutional adoption by removing barriers to entry. These new custody options aim to reduce friction in compliance and attract responsible players to U.S. markets.
Clear Crypto Regulation Supports U.S. Innovation
The SEC will also enable platforms to offer a broader range of crypto products in response to evolving market demand. Current regulations restrict platforms from listing tokens with uncertain legal status or expanding their offerings. Atkins intends to fix this by allowing flexibility through rule changes and conditional exemptions.
Regulated platforms may soon be able to trade more tokens, provided they follow updated disclosure and risk management rules. This would support competitive growth while maintaining market integrity. Market participants would also benefit from regulatory clarity about how trading rules apply to decentralized and centralized systems.
The commission recognizes that U.S. innovation should not be forced offshore due to outdated frameworks. With clear crypto regulation, firms can operate confidently within the U.S. while upholding investor protections. Atkins views this approach as key to establishing the United States as a blockchain and digital finance leader.
FAQs
What is the SEC’s new approach to Crypto Regulation?
The SEC will use rulemaking and exemptions rather than enforcement to define how crypto assets are treated under the law.
Will the new rules help crypto companies stay in the U.S.?
Yes, clear Crypto Regulation aims to reduce legal uncertainty, making it easier for companies to operate domestically without regulatory confusion.
What will change in crypto asset custody requirements?
The SEC may allow alternative custody solutions if they meet investor protection standards and comply with updated regulatory rules.
How will trading platforms benefit from new regulations?
With better guidance, platforms can list a wider range of assets and expand services legally and transparently under Crypto Regulation.
Why is this regulatory shift significant?
This shift offers predictability, helps prevent scams, and promotes responsible innovation in the crypto sector through clear Crypto Regulation.
Glossary of Key Terms
Crypto Regulation – Legal and compliance frameworks governing the trading, issuance, and storage of crypto assets in financial markets.
Custody – The process of safeguarding assets, often including mechanisms for protecting and managing access to digital tokens.
Exemptive Relief – Regulatory relief granted by the SEC that allows deviation from certain rules under specific conditions.
Qualified Custodian – A financial institution that meets regulatory criteria to hold assets on behalf of investors securely.
Investment Contract – A legal term referring to an arrangement where a person invests money expecting profits from others’ efforts.
Tokenization – Converting rights to an asset into a digital token on a blockchain, often used for trading or fundraising.
Decentralized Finance (DeFi) – A financial system built on blockchain that operates without centralized intermediaries like banks or brokers.
Rulemaking Authority – The legal power given to agencies like the SEC to create and implement regulations within their jurisdiction.
Digital Asset – Any asset stored digitally, particularly those using blockchain technology, including cryptocurrencies and tokens.
Market Integrity – The assurance that financial markets operate fairly, transparently, and efficiently, maintaining trust among participants.
Reference:
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