The Securities and Exchange Commission (SEC) appears to be softening its stance on cryptocurrency regulation, signaling a potential shift towards collaboration with Congress. This development comes as the SEC has recently issued guidance on stablecoins and memecoins, defining the latter as tokens "inspired by internet memes, characters, current events, or trends" that are not securities. The agency has taken on aggressive disclosure standards for digital assets that fall under the securities umbrella. It hasn’t explained what exact tokens would be included in that group.
Incoming SEC Chair Paul Atkins puts the focus on this development direction. He has already promised to work with Congress to produce a stable and consistent regulatory environment for digital assets. His position is a clear pivot from the enforcement-heavy posture of his predecessor, Gary Gensler. Gensler’s assumption was that existing regulations already provided enough oversight for the crypto market, which lessened the need for any additional action by Congress.
Atkins' Commitment to Collaboration
At his confirmation hearing before the Senate Banking Committee, Paul Atkins promised to do much more in the way of guidance on the regulation of crypto.
"work with my fellow commissioners and Congress to provide a firm regulatory foundation for digital assets." - Paul Atkins
While Atkins did not explicitly state that he anticipates Congressional action before the SEC issues further clarifying guidance, his statements suggest a willingness to collaborate with lawmakers on the issue. This anticipated Burlington deference to Congress is one of the more notable changes in tone from the last administration.
Congress Eager to Regulate
A few things suggest that Congress may be ready to assert themselves more on guiding the future course of crypto regulation. House Financial Services Committee Chairman French Hill recently committed to introducing a new market structure bill this year. This action is the first step to demonstrate his commitment to developing a consistent framework for the digital asset market. House Financial Services Digital Assets Subcommittee Chair Bryan Steil and Rep. Given the uncommon emphasis on legislation to reform market structure, this event showed just how committed we are to this issue.
Even though industry players were hoping that the SEC would act on their own, those watching closely argue that Congressional action is unavoidable. According to two lobbyists and one Senate Banking committee staffer, those hopes are a lost cause.
"What they don’t understand is the regulatory pendulum swings back and forth and the political pendulum swings back and forth. We are kind of near the apex of crypto’s power because of, frankly, all the money that was spent on the election and the fact that their favorite candidates got elected. But this moment in time will not last." - Congressional staffer
This feeling indicates that the industry’s sway might be reaching its zenith, and tougher regulation is just over the hill.
A Shift in Regulatory Sentiment
The politics are changing, and you can feel it. In addition to the SEC, the Department of Justice is adopting a more favorable stance on crypto regulation. This change in mood is very important. With Atkins’ expected confirmation and his long-standing support for light-touch regulation when he served as an SEC commissioner, we should see a more balanced approach to the digital asset space.
