Crypto Gets a Regulatory Reset: SEC to Replace Crackdowns with Clear Rules and Public Consultation Under Atkins

SEC Shifts Focus to Clearer Crypto Rules and Less Enforcement

The U.S. Securities and Exchange Commission (SEC) is charting a new course for cryptocurrency regulation under Chairman Paul Atkins, aiming to replace enforcement-heavy tactics with a structured rulemaking process.

Speaking at a Senate Appropriations Committee hearing in Washington, D.C., Atkins outlined plans to establish transparent regulations for crypto assets, focusing on investor protection alongside innovation.

Will Rulemaking Replace Enforcement in Crypto Oversight

Atkins, who took office earlier this year, declared that the SEC will move away from a “regulation-by-enforcement” approach.

Instead, the agency intends to develop standards through “notice and comment” procedures, inviting public input on policymaking rather than relying on punitive actions.

Atkins said,

“We will use our existing authority to develop standards that meet market needs and allow innovation, not stifle it.”

This strategic shift also includes dissolving the SEC’s specialized FinHub and integrating crypto regulation into the agency’s core functions.

The new framework targets key areas such as issuance, custody, and trading of digital assets, promising more clarity for major cryptocurrencies like Ethereum (ETH) and Bitcoin (BTC), as well as emerging blockchain projects.

How the Market Reacts to SEC’s New Approach

Industry participants have greeted the announcement with cautious optimism.

Developers and compliance experts expect clearer regulatory guidelines to reduce legal uncertainty, which could support broader adoption of decentralised finance (DeFi) and blockchain innovation within the United States.

Atkins emphasised the importance of protecting investors from fraud, stating,

“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.”

The SEC plans to enhance its Virtual Asset Task Force and hold public forums on DeFi to support this goal.

What’s Changing From Previous Leadership

Atkins’ approach contrasts sharply with that of his predecessor, Gary Gensler, whose tenure was marked by aggressive enforcement against crypto firms.

Since Gensler’s departure, the SEC has scaled back several high-profile lawsuits and offered guidance exempting certain crypto activities, such as some staking operations, from securities laws.

The timing of this regulatory shift coincides with increasing pressure from Congress.

Recent legislative proposals like the CLARITY Act seek to limit the SEC’s authority over crypto, proposing new legal frameworks to foster innovation while protecting consumers.

Representative Bryan Steil (R-WI) described the bill as a way to “secure American dominance” in digital assets while preventing fraud.

Can the SEC Balance Innovation and Investor Protection

Despite political and regulatory uncertainties, Atkins remains committed to supporting market innovation.

He anticipates benefits from blockchain technologies that include improved efficiency, transparency, and risk reduction.

The SEC’s upcoming DeFi roundtable and expanded task force signal an intent to engage with industry stakeholders and encourage responsible development.

Meanwhile, Ethereum’s current market data reflects ongoing volatility.

Trading at around $2,648.70 with a market cap exceeding $319 billion, Ethereum’s 24-hour volume has seen a 22.07% decline to $16.526 billion, highlighting the dynamic environment regulators and investors navigate.

By stepping back from an enforcement-first stance and emphasising clear, inclusive rulemaking, the SEC under Atkins aims to create a more predictable environment for digital assets—one that balances safeguarding investors with encouraging growth in a rapidly evolving market.