The Securities and Exchange Commission (SEC) Chair Paul Atkins spoke at a Senate hearing on Tuesday to discuss the agency’s shift on cryptocurrency regulation. This comes as the Senate bargains over the President Donald Trump’s “One Big Beautiful Bill” and the GENIUS Act, which would have the federal government invest heavily in cryptocurrency.
Atkins spoke at the Senate Appropriations Subcommittee on Financial Services and General Government, saying the agency will change its rulemaking process regarding crypto from “regulation by enforcement” to ”notice and comment” for crypto issuance, custody, and trading. Among other things, he described how the Trump administration will reduce the government’s policing of crypto. Atkins positioned this move as providing more transparency and acting on more input from the public.
”The Commission will utilize its existing authorities to set fit-for-purpose standards for market participants,” Atkins said in his prepared remarks. “The Commission’s enforcement approach will return to Congress’ original intent, which is to police violations of these established obligations, particularly as they relate to fraud and manipulation.”
The “notice and comment” process consists of the SEC publishing a proposed rule in the Federal Register, which would lead to a comment period of 30-90 days, allowing the public and stakeholders time to comment on the rule. After the comment period, the agency would review the comments and decide whether to make the rule final. “Regulation by enforcement” was common during the Biden administration when the SEC filed lawsuits against crypto companies. The results of these cases, whether it be a judge ruling or a settlement, would establish the rules other companies would need to follow. While the former is more transparent and involves less time in court, “notice and comment” does allow for crypto companies to continue certain practices that could be deemed illegal for some time before any action is taken against them.
Along with his comments about the SEC’s new stance, Atkins reiterated his intentions to disband the agency’s Strategic Hub for Innovation and Financial Technology (FinHub). He spoke to Congress last month regarding his plans to seek approval to close the hub, which was created in 2018 and coordinates the SEC’s oversight of emerging technologies such as digital assets and artificial intelligence.
Atkins is facing some criticism from House Democratic staffers who expressed concerns over the SEC’s handling of the CLARITY Act, according to a report from The Block. The proposed bill would establish a clearer regulatory framework for cryptocurrency market structure and the roles of regulators such as the Commodity Futures Trading Commission and the SEC. When members of the SEC provided technical analysis to House Democratic staffers on the bill, the staffers claimed that it was the ”worst technical assistance briefing” and that SEC officials possibly withheld information that was provided to Republican members.
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