SEC Chairman Paul Atkins announced a shift in cryptocurrency regulation strategy during his presentation to the U.S. Senate Appropriations Committee. He stated that the new approach will focus on a “notice and comment” process, replacing the era of shaping rules through enforcement actions. Atkins emphasized the importance of clear regulations to protect investors from fraud and outlined the use of existing authority to develop standards suitable for market players. The SEC’s Crypto Working Group is tasked with preparing drafts that consider industry needs, with the initial report expected in the coming months. Furthermore, Atkins revealed plans to dissolve the Fintech Innovation Hub (FinHub) established in 2018, integrating its innovative concepts directly into the SEC’s main structure.
“Notice and Comment” Model Targets Clarity and Involvement
This strategy aims to provide the predictability long sought by the market. Drafts announced in the Federal Register will allow industry, investors, and academics to review and offer public feedback. The “notice and comment” approach is envisioned to reduce legal uncertainties around cryptocurrencies, prevent court-driven surprises, and facilitate the swift updating of standards. Although criticisms exist regarding the non-binding nature of the feedback, Atkins highlighted the participatory essence of the process by stating, “Dialogue will replace enforcement pressure.”
Financial circles are particularly eager for concrete feedback from cryptocurrency exchanges and custody service providers to clarify licensing conditions through these drafts. By doing so, federal-level rules will emerge beyond the fragmented regulations applied in different U.S. states. Market insiders believe that coordination with regulators outside the U.S. will also be smoother using this model, as public drafts provide opportunities for comparative analysis by international regulators.
FinHub to Close, Streamlining Innovation into Core Operations
Atkins argued that retaining FinHub as a separate unit slowed innovation, announcing that the crypto-focused research and oversight capacity will be distributed directly within the divisions. This move is expected to eliminate the confusion over granted authority and accelerate the development of expertise among staff in actual cases. Similar strategies have previously enhanced efficiency in market surveillance units.
While market players express concerns about innovation being overshadowed by the closure, Atkins reassured that “structural integration is stronger than isolating innovation” to allay fears. The SEC’s request for additional budgets to expand technology infrastructure for blockchain analytics and open-source code review teams further demonstrates its commitment to expanding its technological framework. Experts predict increased coordination within the SEC and quicker regulatory decisions in this new framework.
