The Chairman of the U.S. Securities and Exchange Commission (SEC) shared progress in crypto regulation: how can innovative exemptions and tokenized securities frameworks provide a clear regulatory pat

Author: Paul S. Atkins, Chairman of the U.S. Securities and Exchange Commission (SEC)

Compiled by Wu Shuo Blockchain Aki

This article is a transcript of a conversation between U.S. SEC Chairman Atkins and ETHDenver on February 18, 2026.

Peirce: It is an honor to share the stage with Chairman Atkins today. Before we begin, I would like to remind everyone that our statements are personal representations made within the scope of our respective official duties and do not necessarily represent the views of the Committee or any other member. Chairman Atkins needs little introduction, but I will briefly provide some background information.

Mr. Atkins was sworn in as the 34th Chairman of the U.S. Securities and Exchange Commission (SEC) on April 21st of last year. Prior to returning to the SEC, Chairman Atkins' most recent role was CEO of Patomak Global Partners, a consulting firm he founded in 2009. Chairman Atkins served as an SEC commissioner from 2002 to 2008; during his tenure, he advocated for regulatory transparency and consistency and promoted the use of cost-benefit analysis in the agency's work.

Chairman Atkins began his career as a lawyer in New York, primarily handling various corporate transactions for U.S. and foreign clients, including public and private offerings and mergers and acquisitions. He spent two and a half years in his firm's Paris office and obtained the French "conseil juridique" (legal counsel) qualification. He is a member of the New York State and Florida Bar Associations, holds a Juris Doctor (JD) degree from Vanderbilt University School of Law, and a Bachelor of Arts (AB, Phi Beta Kappa) degree from Wofford College (1980). Chairman Atkins was born in Lillington, North Carolina, and grew up in Tampa, Florida. He and his wife Sarah have three sons.

There's another interesting fact about Chairman Atkins: he's fluent in both German and French. Presumably, he's also considering adding another language to his repertoire. Mr. Chairman, have you considered learning Solidity?

Atkins: No need. Vibe coding is perfectly adequate. Compared to BASIC-PLUS and COBOL, which I used in college, this is a huge improvement.

Peirce: That makes sense, Mr. Chairman. But if your AI-written smart contracts start claiming "everything is a security," then we have to question whether it's an AI illusion. A few years ago, if someone had told me I would be standing on stage at a crypto conference with the SEC Chairman, I would have thought they were talking nonsense. But we are here—so let's get down to business.

Over the past year, with the US Securities and Exchange Commission (SEC), under Chairman Atkins and during the period earlier this year led by Acting Chairman Uyeda, we have taken numerous steps toward “clarifying” crypto regulation, including:

We proactively solicited and received written responses to a set of challenging questions covering a wide range of encryption topics.

Several in-depth roundtable discussions were held on a number of specific topics, including: the definition, trading, custody, tokenization, DeFi and privacy; numerous developers and builders were met at “Cryptocurrency Going Global” exchange events held offline and online in Washington, DC, and in many other parts of the country; and technical assistance was provided to the United States Congress in its efforts to advance cryptocurrencies legislation.

Launching a new cooperation initiative with the Commodity Futures Trading Commission (CFTC) to establish a long-term foundation for regulatory coordination and cooperation in areas of common concern, including crypto; ending the practice of "regulation by enforcement";

Multiple staff guidance documents and FAQs were released to help the market understand what SEC staff consider to be within and outside the SEC’s jurisdiction (covering issues such as mining, staking, meme coins, stablecoins, etc.), and how regulated entities should follow existing rules when engaging in crypto-related businesses; some unhelpful staff guidance documents, such as SAB 121, were repealed.

Released a staff statement concerning broker-dealers' custody of "crypto asset securities"; released an interagency staff statement proposing a taxonomy for tokenized securities; and approved generic listing standards for crypto ETPs (exchange-traded products).

The government will issue no-action letters to staff of several projects, including those related to tokenization and DePIN; and initiate processes for rule design, exemptions, and committee interpretation to lay the foundation for a sustainable and stable regulatory framework.

Mr. Chairman, could you please give us a preview of what developments we can expect in the area of ​​crypto regulation this year?

Atkins: We have a lot of work to do. In addition to continuing to communicate on the important legislative work that Congress is undertaking, as you mentioned, we are also advancing regulatory efforts through "Project Crypto." This project is now being carried out as a joint initiative with the Commodity Futures Trading Commission (CFTC).

As you all know, one of our colleagues—Mike Selig—was previously brought in by Commissioner Hester M. Peirce to the US Securities and Exchange Commission (SEC) as the lead legal counsel for the Crypto Task Force in my office; he is now the Chairman of the CFTC. We plan to work together on a number of important matters—regulatory harmonization, joint rulemaking—to create an unprecedented joint and coordinated regulatory approach, especially given the past clashes between the two agencies on regulatory boundaries.

As far as the SEC is concerned, I expect the committee and staff to focus on the following issues in the coming weeks and months:

A framework document at the committee level: explaining how we view crypto assets that may constitute "investment contracts" and are therefore subject to regulation. How are investment contracts formed? And how are they terminated?

Innovation Exemption: Allows limited trading of partially tokenized securities on new platforms in order to explore and gradually develop a long-term regulatory framework in practice.

Rulemaking proposal: Establish a more common-sense and workable path to enable market participants to raise funds in scenarios related to the sale of crypto assets.

Letters of no action and exemptions: providing further clarification, including responses to questions about whether products such as wallets and other user interfaces (UIs) need to be registered under the Securities Exchange Act; clarification will be provided for those that do not fall under the registration scope.

Rulemaking for broker-dealer custody: Conduct rulemaking work on the custody of "non-security crypto assets" by broker-dealers, including payment stablecoins.

Modernizing transfer agent rules: Promoting the updating of transfer agent systems to accommodate the potential role of blockchain in record keeping.

Supplementary guidance and no-action letters: We will continue to help market participants understand how existing rules apply in their specific factual contexts through additional guidance and no-action letters.

Peirce: It certainly sounds like a lot of work, but for us "securities rules enthusiasts," this experience is a bit like participating in the Olympics—the excitement is almost comparable to swooping down a ski slope at 80 mph, performing a high-difficulty maneuver in mid-air, or landing a quadruple jump followed by a backflip on ice. While we're nowhere near as "dramatic" as Olympic champions, we do have a rare opportunity to re-examine a multitude of complex regulatory issues within the context of this new technology. This task also requires "aerial skill," and we don't want to hurt or break anything—the only thing to break down are the unnecessary regulatory barriers that hinder technological progress.

I'd like to take a moment to talk about the "innovation exemption." The expectations and concerns it has generated likely need to be tempered. In fact, the way people are talking about it now reminds me of those who buy abandoned lockers: they firmly believe that inside lies a rare masterpiece and a box full of gold bars. Similarly, some people are convinced that the innovation exemption can solve all their regulatory pain points at once.

On the other hand, some in traditional finance (TradFi) seem to believe that this soon-to-be-opened locker holds a monster—one that will devour the entire traditional financial system in an ugly way. They worry that the innovation exemption will allow crypto companies to disregard all rules. Ultimately, both sides will likely find that the innovation exemption is not as "disruptive" as either side imagines. It will be an important step towards smoother integration of tokenized securities into the existing financial system, but it won't change the entire financial system overnight.

We are still proceeding gradually—as always. The goal is to facilitate the absorption of new technologies into the system in a "naturally growing" manner: enhancing the system's vitality and resilience while enabling it to more effectively serve investors, businesses, and other users of capital. Paul, could you elaborate on what your vision for innovation exemptions would look like?

Atkins: I'm inclined to consider an "innovation exemption" that would allow both traditional financial players and crypto-native institutions to experiment within certain boundaries. For example, allowing market participants to trade certain tokenized securities through Automated Market Makers (AMMs), even if the mechanism might not be "controlled" by any single person or group. In my view, market participants should be able to interact with decentralized applications on public, permissionless blockchains, provided they are willing. However, I also anticipate that many Americans will prefer intermediaries to hold their assets and trade on their behalf. The choice of intermediaries should be made by individual investors, not by the SEC. I also want to discuss whether a "safe harbor" should be provided for participants who might actually facilitate such transactions.

Specifically, I would like to explore how issuers intending to tokenize their securities can collaborate with transfer agents or other tokenization agents to tokenize the securities, enabling them to be traded on-chain via an AMM or other trading systems, environments, or platforms that provide decentralized liquidity. Following this potential path, the innovation exemption would cap transaction size (volume) and potentially grant exemptions to certain rules and requirements—requirements that may not be relevant under this technology's operating model. Buyers and sellers of tokenized securities would need to go through a whitelisting process. This exemption would be temporary, but long enough to allow us to assess whether new rules or revisions to existing rules are needed to allow such transactions to continue under appropriate conditions and to enable any relevant parties requiring registration to do so. I welcome feedback on this potential solution.

Peirce: Thank you for giving us a "glimpse" of the lockers. There's no Picasso, but there are no terrifying monsters either. It's just a gradual step from which market participants can learn and potentially help us move towards a "fit-for-purpose," long-term sustainable regulatory framework. Speaking of new things, you and I have both seen some demonstrations showing us how these technologies (such as decentralized exchanges) work. What impressed you most about what you saw?

Atkins: One interesting aspect of this technology is its ability to "embed" compliance requirements into smart contract code. For example, a company's founders could directly write their commitment to "not resell their securities for a certain period" into the smart contract managing tokenized securities. Similarly, we can use blockchain to reimagine how issuers and holders communicate. Furthermore, privacy-preserving technologies such as zero-knowledge proofs could fundamentally change how we achieve the regulatory goals of the Bank Secrecy Act. In this model, Americans wouldn't have to surrender their privacy entirely to financial institutions, and these intermediaries would face lower compliance costs.

Peirce: That sounds very promising. I've always been deeply concerned about how deeply financial surveillance is embedded in our financial system. Americans now have the opportunity to use new technologies to protect themselves from criminals and our nation from threats from adversaries. We should seize this moment to recognize the importance of financial privacy to the security of the American people.

Now let's talk about the "elephant in the room": What are your thoughts on the recent drop in crypto asset prices? Should regulatory attention be focused on this issue now? Should regulators panic, or even care about the price decline?

Atkins: Regulators' role isn't to worry about daily market fluctuations; our role is to ensure market participants have the disclosures they need to make informed investment decisions. Whether buying stocks, precious metals, or crypto assets, if someone's only focus is "the numbers always go up," they're likely to be disappointed. Markets rise and fall due to a multitude of factors. As regulators, our most important task is to ensure that the rules governing the asset classes we regulate provide market participants with the necessary information to express their judgment and sentiment about the market through decisions such as whether to buy those assets.

Peirce: I agree. "Number go down" is a popular slogan right now, and some crypto critics have even "taken to the streets to celebrate." In German, this reaction could be called "Schadenfreude," which roughly translates to "schadenfreude"—taking pleasure in the loss or destruction of others. Here, we might call their attitude "Ethbelowthreeglee" (the jubilation of Ethereum falling below three thousand) or "Bitcoinunderseventylevity" (the exhilaration of Bitcoin falling below seventy thousand).

The best response to these critics isn't a frantic search for regulatory changes to "make the numbers rise again." Of course, providing clearer rules through legislation and regulation can help create an environment conducive to development. But regulation isn't the "source" of value. You have to create what people truly want and truly need. Only then can you gain broader support across both parties in Washington—if people are actually using something, the government will be less willing to take it away.

Mr. Chairman, could you share some lessons learned from your years of experience in the capital markets on how innovators can interact more effectively with the regulatory system and successfully advance compliance and innovation?

Atkins: I agree with you. The very fact that Washington is building things that people truly want and need speaks volumes. If this technology is developed and applied carefully, it could have a transformative impact on the financial system as securities are gradually put on-chain. For example, asset tokenization could change the financial system we know by shortening settlement cycles, facilitating the flow of collateral and dividends, enabling proxy voting, or making it easier for people to build and manage “customized, decentralized” portfolios. We are ready to partner with entrepreneurs committed to building a better future.

I'm reluctant to repeat the often-ridiculed slogan of the previous administration, but I'd still like to say: "Come in and talk to us." We will not favor any particular asset or technology, nor will we act as your advocate, but we want our markets to remain open to those offering new products and services. Our regulatory framework should not be an obstacle to innovation—especially when such innovation can further achieve our regulatory goals of protecting investors, promoting capital formation, and maintaining fair, orderly, and efficient markets.

Peirce: You struck a good balance. We're not cheerleaders for any new assets or technologies, but we want the market to welcome those with ideas who are trying to improve how the market works. The SEC hasn't always been friendly enough. Improper regulation can deprive the American public of benefits they could otherwise enjoy.

For example, our past reluctance to engage in constructive communication with token issuers has led to an anomaly: tokens that do not grant holders any substantial rights are less likely to attract negative regulatory attention than those that do. The consequence is that we now live in a world where most tokens do not grant their holders any rights.

I hope we can reach a point where project developers are no longer afraid to design tokens that have a claim on revenue streams and are therefore securities. Paul, what conditions and changes do we need to meet to achieve a state where "people can confidently issue tokens that rightfully fall into the category of securities"?

Atkins: We need to move forward with what we're doing—providing clearer rules and pathways on how tokenized securities fit into the existing regulatory framework and how intermediaries should operate compliantly when trading and custodian tokenized securities on behalf of clients. This work can only be done collaboratively; we welcome input from all parties, including crypto opponents indulging in schadenfreude.

I encourage everyone here to consider: what attributes should a token possess to truly be useful to people? Then, work with us to develop a regulatory framework that can accommodate and support these attributes without compromising our key regulatory objectives. Of course, this process takes time. Innovators don't necessarily have to wait until these changes are fully implemented before they begin building. While we engage in broader discussions and assess whether fundamental adjustments to the regulatory framework are needed, communicating with us to see if there are viable compliance paths for existing rules within your specific circumstances and business structures may be a necessary transitional step.

Peirce: Paul, you're known for your optimism even in difficult times. Do you have any advice for listeners going through a tough crypto market cycle as it comes to an end?

Atkins: Get to work and build what really matters. That's how you transform "Schadenfreude" into "Freudenfreude"—the genuine joy we feel when others succeed. A little dark chocolate and Diet Coke might help, but things like Celsius and Zyn should be consumed in moderation.