In a significant shift from previous enforcement-heavy approaches, the US Securities and Exchange Commission (SEC) is set to develop a more transparent and participatory framework for cryptocurrency regulation. SEC Chair Paul Atkins, speaking before the Senate Appropriations Subcommittee on Financial Services on 3 June, laid out a vision for the commission’s crypto strategy that prioritises rulemaking through public input over courtroom confrontations.

A Turn Away from “Regulation by Enforcement”

Atkins made it clear that the SEC will no longer pursue the contentious “regulation by enforcement” method, which became the hallmark of former Chair Gary Gensler’s tenure. Instead, the SEC will rely on the formal notice-and-comment rulemaking process, a standard government procedure that involves publishing proposed rules, collecting public feedback, and making revisions before final adoption.

“The commission will utilise its existing authorities to set fit-for-purpose standards for market participants,” Atkins told the subcommittee. Emphasising the need for regulatory clarity, he added that enforcement would now be used strictly to address clear violations, especially in cases of fraud or market manipulation.

Building a Rational Crypto Framework

Atkins, who previously worked as a crypto lobbyist, highlighted the creation of a “rational regulatory framework for crypto assets” as a core priority of his administration. His vision involves establishing clear standards for the issuance, custody, and trading of digital assets, as well as safeguarding investors from fraud and scams.

“Clear rules of the road are necessary for investor protection against fraud, not the least to help them identify scams that do not comport with the law,” Atkins stated. This approach aligns more closely with traditional financial regulation, which focuses on upfront guidance rather than retroactive punishment.

Under this model, the SEC’s role would be to define clear boundaries for market activity and intervene only when those boundaries are crossed. This change is expected to boost industry confidence and foster innovation while still upholding legal standards.

Crypto Task Force and Upcoming Regulations

Atkins also updated lawmakers on the progress of the SEC’s Crypto Task Force, launched on 21 January under acting chair Mark Uyeda. The task force is responsible for designing a “workable crypto framework” and is expected to publish its first report in the coming months.

When pressed by Senator Chris Coons about whether crypto exchanges should be allowed to handle both traditional securities and digital assets, Atkins avoided a direct answer. Instead, he reiterated that the task force’s work is focused on creating practical regulations that support innovation while ensuring compliance.

This cautious yet progressive stance suggests that the SEC under Atkins is moving toward a more collaborative and industry-friendly regulatory posture, without compromising on consumer protection.

Sunsetting FinHub and Integrating Innovation

Another major announcement was Atkins’ proposal to shut down the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub). Established in 2018, FinHub was created to help the SEC engage with fintech and crypto innovations. However, Atkins argued that innovation should be embedded throughout the SEC, rather than siloed in a dedicated office.

“Innovation should be ingrained into the culture SEC-wide and not limited to a relatively small office,” he said. The move signals a deeper structural shift, suggesting that the SEC is preparing to treat crypto and fintech as integral parts of the broader financial system, not fringe sectors requiring special oversight.

Early Signs of Reform

Since Gensler’s resignation on 20 January, the SEC has already taken steps to realign its stance on crypto. It has dropped several long-running enforcement actions and issued guidance clarifying that common crypto staking practices do not inherently violate securities laws. The commission has also published resources to help market participants understand how existing laws apply to various crypto activities.

These early actions reflect the broader policy overhaul envisioned by Atkins, one that respects both investor protection and the technological dynamism of the digital asset space.