SEC Chair's "Project Crypto" Speech Full Text: Moving the U.S. Financial Market Fully Onto the Blockchain

Speaker: Paul S. Atkins, Chairman of the U.S. SEC

Translator: Alex Liu, Foresight News

The U.S.'s Leadership in the Digital Financial Revolution

Good afternoon, everyone. Thank you for Norm's warm introduction, and thank you for inviting me to speak. I am delighted to be here with all of you, especially at what I consider a pivotal moment for the U.S. to demonstrate leadership in the crypto asset market. Before I share some thoughts, I would like to thank the America First Policy Institute for convening this timely discussion. Additionally, to reassure the compliance team, I must state that

Today, I would like to discuss what Commissioner Hester Peirce and I have referred to as the "Crypto Project," which will be the guiding light for the SEC in assisting President Trump's efforts to make the U.S. the "global capital of crypto." However, before delving into our plans for market dominance in the crypto space, I would like to first reflect on some pivotal points in the history of capital markets, as they are quite similar to the juncture we find ourselves in now, and the future we shape should be worthy of the legacy we have inherited.

From the Buttonwood Tree to Blockchain: The Evolution of Capital Markets

The winds of innovation have always swept through our capital markets, sometimes even like a hurricane. In 1792, it rustled the leaves of a buttonwood tree—under its shade, over twenty stockbrokers gathered, signed an agreement, and founded the precursor to the New York Stock Exchange. That handwritten parchment agreement, less than a hundred words long, initiated an elegant system that has for generations governed the flow of capital.

For centuries, our markets have never stood still. They have expanded, evolved, and reshaped themselves with contemporary ideas and technologies. The vitality of the markets comes from human participation. Markets guide human creativity towards society's most challenging problems and reward those who develop the most valuable and popular solutions through incentive mechanisms. This is the operation of Adam Smith's "invisible hand": even as individuals pursue their self-interest, the market can steer it towards serving the public good.

The SEC's responsibility is to protect such a market: to allow human creativity and skills to benefit society. Throughout its history, the SEC has both fostered innovation and, regrettably, stifled it. Fortunately, the forces of progress always prevail. When our regulatory posture can embrace innovation with prudence rather than fear, America's leadership always reaches new heights.

In the 1960s—before my time—Wall Street was experiencing a bull market, but behind the scenes, the market operations were often strained. Most clearing and settlement processes still relied on expensive and cumbersome procedures. Paper stock certificates stacked up and had to be wheeled around by staff members, shuttling back and forth between Wall Street and financial centers across the United States.

This paper-based clearing and settlement system was designed for a more gentle era and was clearly struggling to handle the rapidly increasing transaction volumes. A delay at one company would ripple through the chain; cases of securities getting lost or stolen were frequent; transaction failures spiked; some weaker brokerages even faced bankruptcy due to trading halts. As a last resort, trading hours were shortened, and exchanges even closed on Wednesdays to give companies time to process the mountain of paper certificates.

The then SEC chairman described this systemic breakdown as the "most severe and enduring crisis in the securities industry in forty years ... bankruptcies, plunging investor confidence." It is worth acknowledging that the SEC actively responded at the time, prompting market participants to establish what we now know as the Depository Trust & Clearing Corporation (DTCC), fundamentally changing the way securities were held and traded.

Subsequently, there was no longer a need for paper certificates to circulate between customers and brokerages or among brokerages. Security ownership began to be recorded on an electronic ledger. The certificates themselves were "immobilized," securely held in vaults, while ownership was transferred through computer systems, laying the foundation for today's clearing and settlement systems.

Like this ticker tape machine by my side, it was once a breakthrough in market information dissemination, allowing Americans to receive real-time trading information line by line. But innovation should not only be the past's glory.

By the late 1990s, electronic trading systems had become popular, disrupting many assumptions of the traditional market structure. SEC Chairman at the time, Arthur Levitt, also believed that the SEC had a responsibility to provide regulatory flexibility for the innovation in electronic markets. Thus, with the introduction of the Alternative Trading System Regulation (Reg ATS) in 1999, these systems were allowed to operate under brokerage regulation rather than traditional exchanges.

This brings us to today—a moment that calls for American ambition, a project that can unleash that ambition.

Our regulatory framework should not be stuck in the analog era, refusing to explore new frontiers. After all, the future is accelerating, and the world will not wait for us. America cannot just catch up to the digital asset revolution; we must lead it.

Pioneering the Future: America's Leadership in the Financial Golden Age

Today, I want to announce to the world that under my leadership, the SEC will not stand idly by as we witness innovation flourishing overseas while our own capital markets stagnate. To realize President Trump's vision of making America the global crypto capital, the SEC must holistically consider the potential benefits and risks of migrating our market from off-chain to on-chain.

We are at a new threshold in the history of our capital markets. As mentioned earlier, today I am officially launching the "Crypto Initiative," a comprehensive SEC-wide effort aimed at modernizing securities regulations to enable the full migration of the U.S. financial market onto the blockchain.

Just a few weeks ago, President Trump signed the "GENIUS Act," establishing a global regulatory gold standard for stablecoins in the realm of global payments. Following the signing, he openly endorsed Congress passing crypto market structure legislation within the year. I appreciate the bipartisan support shown by the House of Representatives in this process and look forward to the Senate further refining the relevant laws to establish a regulatory-resilient institutional framework for our market, solidifying America's leading position in the global crypto industry.

Yesterday, the President's Working Group on Digital Assets released the "PWG Report," providing clear recommendations to the SEC and other federal agencies to establish a framework to maintain America's leadership in the crypto asset market. This report serves as a blueprint to ensure the U.S. remains at the forefront of blockchain and crypto technology. As the President stated last week, he hopes that "the world will run on U.S. technology infrastructure." I am ready to help realize this goal.

Therefore, I have launched the Crypto Initiative and instructed the SEC's policy division to work closely with the crypto working group led by Commissioner Peirce to quickly develop plans to implement the recommendations of the "PWG Report." The Crypto Initiative will ensure that the U.S. continues to be the most conducive country for entrepreneurship, technological advancement, and participation in the capital markets. We will bring back domestic crypto entities that left the U.S. due to the previous administration's "enforcement-only" policy and "Operation Chokepoint 2.0." Whether established firms or new entrants, the SEC welcomes market participants eager for innovation.

Bringing Crypto Assets Back to the U.S.: A New Era for the SEC

The Crypto Initiative will encompass a series of measures within the SEC.

First and foremost, we will strive to bring crypto asset issuance back to the U.S. Those complex offshore corporate structures, pseudo-decentralization theatrics, and the confusion around whether crypto assets are securities will become a thing of the past. President Trump has signaled that America is in its "golden age" — and under our new agenda, the crypto asset economy will also enter a golden age.

According to the recommendations of the "PWG Report," one of my top priorities is to expeditiously establish a regulatory framework in the United States applicable to the issuance of crypto assets. Capital formation is a core part of the SEC's mission, but for a long time, the SEC has overlooked the market's demand for choices and has suppressed crypto-based fundraising models. This has led the crypto market to gradually move away from asset issuance, depriving U.S. investors of the opportunity to participate in productive economic activities through this technology. The SEC's long-standing avoidance of crypto assets, in a "shoot first, ask questions later" manner, should become history.

Although the SEC's past position has been to consider the majority of crypto assets as securities, in reality, most crypto assets are not securities. However, due to the ambiguous application of the "Howey Test," some innovators, for prudence's sake, have treated all crypto assets as securities. Entrepreneurs in the U.S. are leveraging blockchain technology to modernize various traditional systems and tools. For example, Ohio's current U.S. senator and former entrepreneur, Bernie Moreno, founded a company before running for office that puts automobile ownership rights on the blockchain. He identified inefficiencies in property transfers and proposed a practical solution using blockchain technology.

These entrepreneurs need and should have a clear set of criteria to help them determine whether their business is subject to securities laws. I have instructed committee staff to develop clear guidelines to assist market participants in determining whether a crypto asset is a security or constitutes an investment contract. Our goal is to help them classify assets based on these clear standards, such as digital collectibles, digital commodities, or stablecoins, and assess the economic substance of their transactions. Through these classifications, market participants can determine whether the issuer has an ongoing commitment or obligation and thereby assess whether the asset constitutes an investment contract.

Furthermore, being identified as a security should not be the original sin of development. We need a regulatory framework that adapts to crypto securities to allow these products to thrive in the U.S. market. Many issuers will prefer to leverage the product design flexibility offered by securities laws, and investors will benefit from securities attributes such as dividends and voting rights. Project teams should not be forced to establish DAOs, create offshore foundations, or decentralize prematurely. I am excited about the new applications of crypto securities in business, such as equity tokenization for blockchain consensus mechanisms.

Therefore, for those crypto asset transactions that do fall within the scope of securities laws, I have instructed staff to propose specific disclosure requirements, exemption provisions, and a "safe harbor" regime, including for so-called "initial coin offerings (ICOs)," "airdrops," and network reward programs. Our goal is to enable issuers to no longer exclude U.S. users due to legal risks but to choose to include U.S. users in their issuance plans to enjoy legal certainty and a friendly regulatory environment. I believe that as long as we maintain this direction, we may usher in an innovative Cambrian explosion.

In addition, many companies are looking to tokenize securities such as common stocks, bonds, partnership interests, and even securities issued by third parties. Due to regulatory obstacles in the United States, much of this innovation has taken place overseas. At the same time, our policy department has received numerous applications—from well-known Wall Street companies to Silicon Valley unicorns—all seeking approval to distribute security tokens within the U.S. I have instructed the commission to collaborate with these companies to provide regulatory exemptions where appropriate to ensure that the United States is not left behind in crypto innovation.

Enhancing Freedom: Providing Diverse Custody and Trading Venue Choices

Second, to achieve the President's goal, the SEC must ensure that market participants have maximum freedom in choosing custody and trading platforms. As I have noted, the right to own and self-manage private property is a core American value. I firmly believe that individuals have the right to use self-custody wallets to hold their crypto assets and participate in on-chain activities like staking. However, some investors may still choose to entrust their assets to SEC-registered intermediaries such as broker-dealers or investment advisors, which are subject to additional regulatory requirements when providing custody services.

During my tenure, implementing the recommendations of the "PWG Report" on "Modernizing SEC Regulation of Registered Intermediary Custody Obligations" will be a priority. The previous administration's initiatives such as the "Special Purpose Broker-Dealer Framework," SAB 121 guidance, and "Operation Cut off the Channel 2.0" have resulted in almost no compliant crypto asset custody service providers in the market today. Existing custody rules have not taken into account the characteristics of crypto assets. I have instructed staff to explore how to adapt the current framework, including providing waivers or amending rules as necessary to foster the development of crypto asset custody services.

The "PWG Report" also recommends allowing market participants to engage in multi-line businesses under the most effective licensing structure. We cannot force them into an outdated "Procrustean Bed" regulatory system. I support allowing them to choose the most suitable regulatory path for their business while safeguarding investor interests.

Driving Super Apps: Achieving Horizontal Integration of Products and Services

Third, another key goal of my chairmanship is to allow market participants to innovate under a "Super-Apps" framework. Many people ask me, "What is a Super-App?" It's simple: Securities intermediaries should be able to offer a diverse range of products and services on one platform and under one license. A broker-dealer with an Alternative Trading System (ATS) should be able to offer non-securities crypto asset trading, securities crypto asset trading, traditional securities services, as well as services like staking and lending, all without needing licenses from over fifty states or multiple federal-level licenses.

The current federal securities laws do not explicitly prohibit the registration of non-securities assets on trading platforms. I have instructed Commission staff to develop further guidance and frameworks to facilitate the implementation of such "super apps." Perhaps ultimately, we will name it the "Reg Super-App."

As recommended in the "PWG Report," the SEC should collaborate with other regulatory agencies to establish a streamlined and efficient licensing regime for registered intermediaries, avoiding overlapping regulatory oversight. This model has been widely adopted in the banking industry, where banks generally do not need to separately register as broker-dealers or clearing agencies. Regulators should provide oversight with the least intrusive measures possible to protect investors and encourage business growth. We should not drive companies overseas with excessive, paternalistic regulations, nor should regulatory burdens unfairly favor large, resource-rich corporations at the expense of stifling competitiveness among small and medium-sized enterprises.

In accordance with the specific recommendations of the "PWG Report," I have directed the Commission to create a framework that allows non-securities-based crypto assets to coexist with securities-based crypto assets on the same SEC regulatory platform. Furthermore, I have requested an assessment of how to leverage the Commission's authority to permit certain crypto assets to be listed on non-SEC registered trading platforms. This would not only enable state-licensed platforms to offer a wider range of assets but also provide margin functionality for platforms regulated by the CFTC, unlocking greater liquidity despite Congress not having granted it additional authority.

Unleashing the Potential of the U.S. Market: The Beautiful Power of On-Chain Software Systems

Fourth, I have instructed Commission staff to update outdated regulatory rules to unleash the potential of on-chain software systems in the U.S. securities market. On-chain software comes in various forms—some systems are truly decentralized, operating without any intermediaries, while others are maintained by specific operators. Regardless of the form, they should have a place in our financial markets.

Any regulatory framework for market structure related to crypto assets must provide a clear path for on-chain software developers who do not rely on centralized intermediaries. Decentralized Finance (DeFi) software systems—such as Automated Market Makers (AMMs)—enable automated, non-intermediated financial market activities. U.S. federal securities laws have always assumed the presence of regulated intermediaries in the market, but this does not mean we should introduce intermediaries solely to conform to outdated regulatory logic. If a market can operate without intermediaries, we should respect that.

We will leave room for both models—centralized and decentralized—to evolve in the U.S. market. We will protect developers who solely release software code, clearly delineate between intermediary involvement and non-intermediated activities, and establish clear, feasible regulatory rules for intermediaries wishing to operate on-chain software systems. DeFi and other on-chain software systems will become part of our securities market, rather than being stifled by redundant or excessive regulation.

In order to achieve this vision, we need to modify existing rules. For example, to support on-chain trading of securities, we may need to amend the National Market System Regulation (Reg NMS). In fact, as early as twenty years ago, I co-authored a dissenting opinion against Reg NMS with then-Commissioner Cynthia Glassman, and today, the concerns we voiced back then appear more relevant than ever. Over the past two decades, the excessive demands imposed by Reg NMS have distorted market activity, hindering the natural evolution of the U.S. securities market. The original intention of Congress was to let "competitive forces rather than superfluous regulation" drive the development of the national market system. I will strive to push us back to this original intent, further promoting innovation and competition in the market.

Driving Innovation: Commercial Viability Is Our North Star

Lastly, innovation and entrepreneurial spirit are the engine of the U.S. economy. President Trump once referred to the U.S. as the "nation of builders." Under my leadership, the SEC will encourage this spirit rather than suppress it with red tape and one-size-fits-all rules. The current commission is actively considering some reform proposals put forward by the industry to spark innovation; at the same time, we are also exploring the introduction of an "innovation waiver mechanism" - allowing both registered and unregistered entities to quickly bring new business models and services to the market, even if these models do not fully align with existing rules.

In my vision, this innovation waiver mechanism will allow technology pioneers and business innovators to immediately participate in the market without having to comply with cumbersome regulations that are outdated or hindering economic activity. Accordingly, they will need to adhere to some principle-based conditions to achieve the core policy objectives of federal securities laws. These conditions may include: a commitment to regularly report to the SEC, introducing a whitelist or "certification pool" function, and only allowing security tokens that meet compliance feature standards (such as ERC3643) to be circulated. I encourage market participants and SEC staff to consider "commercial viability" as a core consideration when developing the model.

Conclusion

While advancing the above priorities, I look forward to collaborating with other government agencies to jointly work towards making the U.S. the global capital of crypto. This is not just a transformation of the regulatory model but also a multi-generational opportunity.

From paper agreements under the buttonwood tree to electronic ledgers on the blockchain, the winds of innovation continue to blow. Our mission is to keep this wind propelling America's leadership forward. After all, ladies and gentlemen, we have never been content to follow others. We will not sit on the sidelines. We will lead the way. We will build it ourselves. And we will ensure that the next chapter of financial innovation is authored in the United States.

Thank you very much for listening today. Please stay tuned for our upcoming announcement and proposal, and feel free to continue offering valuable suggestions and feedback as always.