If you say that the US SEC has a good relationship with the crypto industry in the past two years, it is basically equivalent to saying that Tiger believes in Buddhism and loves to eat vegetarian food. Most of the time, the SEC's attitude is either "Don't do it first" or "If you dare to do it, I dare to sue." But now the style seems to have changed a bit.
On May 12, Paul S. Atkins, chairman of the US Securities and Exchange Commission (SEC), gave a very dense speech at the "Crypto Asset Roundtable". At first glance, it was an industry exchange, but in fact it was a systematic reflection on the SEC's crypto regulatory model in the past few years. More importantly, he spent nearly an hour re-explaining the regulatory logic of "on-chain securities."
If you use one sentence to summarize the tone of his speech, it is: The rules should be clearly written, and law enforcement should not be used to scare people.
This is the first time in recent years that the SEC has explicitly proposed to establish a "special regulatory framework" for the issuance, custody and trading of crypto assets, and admitted that the current rules do not apply to on-chain assets. This is a signal that cannot be ignored for the entire Web3 industry.
Issuance: It's not "not allowed to issue", it's "you can't fill in this set of forms"
In recent years, the SEC's strategy for token issuance has almost been "illegal by default", but it does not provide a legal path. Most projects that dare to touch American investors must be prepared to respond to lawsuits. Even if you want to comply with regulations and take the registration path of S-1 and Reg A, you are often stuck in the inapplicability of the form itself.
S-1 is a standard registration document filled out by American companies when they go public, requiring detailed disclosure of executive compensation, use of funds, corporate governance structure, etc.; Reg A (Regulation A) is a lightweight registration exemption mechanism designed for small and medium-sized issuers. But for most Web3 projects, these two sets of tools are too cumbersome or even incompatible. For example, token projects do not have traditional corporate structures, and the use of funds is often automatically executed on the chain, and many core contents cannot be "pre-written". Chairman Atkins said it very bluntly this time: the current disclosure requirements for securities issuance should not be forced on on-chain assets. "Square pegs should not be forced into round holes," he said directly in his speech. He proposed to promote registration exemptions, disclosure templates and safe harbor clauses specifically applicable to crypto assets to explore more realistic regulatory paths. He also specifically pointed out the SEC's past "ostrich-style management": at first, it pretended not to see it, hoping that the industry would perish on its own, and then it plunged into law enforcement, using individual cases to create deterrence, but never established unified rules. Now he has made it clear - the rules must be passed by the committee, and no longer rely on "improvisational law enforcement."
Custody: Technology is not the problem, the problem is that the system has blocked the technology
The custody of crypto assets has actually been a question of "who will manage" in recent years. Traditional financial institutions were scared off by SAB 121, and self-custody has no legal status. As a result, many funds and institutions wanted to participate in on-chain asset allocation, but were finally stuck in the custody link.
SAB 121 is an accounting announcement issued by SEC staff in 2022, requiring companies to include the custody of customer crypto assets in their balance sheets, resulting in a sharp increase in regulatory risks. Its original intention was to protect user assets, but the actual effect was to make most banks and securities firms withdraw from the crypto custody market.
Now that SAB 121 has been revoked, the chairman also made it clear that the document was "illegal, unapproved, and had a bad impact." But more importantly, he began to talk about how to fix it next.
He pointed out that as long as the security is sufficient, technical capabilities can replace traditional custody qualifications. Under certain conditions, self-custody can also be a compliance option. This actually opens up the possibility of compliance for DeFi platforms, wallet manufacturers, and even on-chain asset management projects.
In addition, he also criticized the failure of the "Special Purpose Broker-Dealer" system design, only two were approved, and the effect was not good. He hinted that this mechanism needs to be reconstructed, that is, the compliance path of custody and trading in the future may be reintegrated and the threshold lowered.
Trading: From "Trading is Violating the Law" to "Limited Exemption Pilot"
The SEC has long maintained a strong regulatory stance on on-chain asset transactions, especially on the hurdle of "whether it is a security", which has led most Token projects to a vicious circle of "not landing, not complying, and not daring to go online".
In this speech, Chairman Atkins' statement was clear about loosening restrictions. He proposed that the ATS (Alternative Trading Systems) platform should support mixed transactions of securities and non-securities.
ATS is a classification of securities trading platforms under the US regulatory system, which can be understood as "unlisted exchanges". Many digital asset platforms have tried to register as ATS to provide compliant trading capabilities. However, the current ATS system does not make a clear definition for crypto assets, which has deterred most platforms.
The chairman also emphasized the necessity of the "exemption mechanism". In other words, if a project cannot meet all compliance requirements temporarily due to technological innovation or special structure, the SEC may provide testing space under certain conditions. This is not laissez-faire, but a compliance channel that is conditional, supervised, and trial-and-error.
Industry impact: Regulatory boundaries are no longer guessed, and compliance space begins to emerge
The greatest significance of this speech is that it is not a case law explanation of a certain project, nor is it the personal opinion of a certain committee member, but the SEC Chairman, under the authorization of the committee, fully expressed the logic of crypto asset regulation for the first time.
The policy background behind this is also very clear: the Trump administration hopes that the United States will become the "global crypto capital", and the SEC, as a core financial regulatory agency, can no longer pretend that crypto assets are marginal businesses.
In the next few years, on-chain securities, stablecoins, RWA, and Token payment platforms may become pilot windows under the SEC's new rules. Entrepreneurs and project parties must also switch from the original "circumventing regulation" mode to the state of "designing endogenous compliance".
Suggestion from a Web3 lawyer: It is not "you can do it", but "do it according to the law"
From a practical perspective, we would suggest:
First, pay attention to the structural adjustments of issuance paths such as S-1 and Reg A. If the SEC promotes crypto-exclusive disclosure rules, project parties can reasonably choose registration exemptions instead of circumventing them by issuing coins outside the United States every time.
Second, pay attention to the preparation of custody compliance.
Whether it is an on-chain wallet, a self-custody system, or relying on a third-party service provider, it is necessary to evaluate its compliance boundaries under the new rules as soon as possible.
Third, pay attention to the policy adjustments of ATS and related trading platforms.
If you are a project that does exchanges and matching products, now may be the window period for structural design to be put back on the table.
Fourth, carefully evaluate whether the project is suitable for the "conditional exemption" mechanism. Some early projects may not be suitable for full registration, but can obtain a landing path through rule exemptions. This is a compliance route, not a gray channel.
This speech is not to announce that the encryption industry "can be done", but to provide a way to do it that can be discussed.
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