SEC Chair Discusses New Directions for Encryption Asset Regulation

At the recent tokenization roundtable, the SEC chairman delivered an important speech on the regulation of encryption assets. He emphasized the importance of transitioning securities from traditional databases to blockchain systems, likening this shift to the revolution of audio moving from analog to digital format.

The chairman pointed out that blockchain technology could fundamentally change the securities market, bringing new methods of issuance, trading, and usage. For example, smart contracts can enable automatic and transparent dividend distribution, while tokenization can help improve asset liquidity. To adapt to this innovation, the SEC needs to reevaluate existing rules to ensure they do not hinder the development of blockchain technology.

In his speech, the chairman emphasized three key areas: issuance, custody, and trading.

Regarding issuance, he promised that the SEC would establish clear guidelines to simplify the registration process for encryption assets. He criticized the SEC's past "ostrich mentality" and "enforce first, ask questions later" approach to cryptocurrencies, stating that he would promote the development of new issuance guidelines, including considerations for additional guidance, exemptions, and safe harbors.

Regarding custody, the chairman supports granting registrants more autonomy. He mentioned that the SEC recently rescinded an unreasonable accounting announcement and stated that it will further clarify the definition of qualified custodians, allowing for self-custody in certain cases.

For trading, the chairman supports allowing registered platforms to offer more diverse products. He mentioned the concept of "super apps" and believes that existing laws do not prohibit brokers from facilitating non-securities transactions. He committed to exploring a modernized ATS regulatory framework to better accommodate encryption assets.

The chairman also stated that while formulating a comprehensive regulatory framework, the SEC will consider granting conditional exemptions for innovative products and services to prevent innovative activities from moving overseas. He stated that he will coordinate with the government and Congress to strive to make the United States the best place in the world for participation in encryption asset markets.