What reforms can we expect from Paul Atkins at the SEC?

Donald Trump recently nominated Paul Atkins as the next chairman of the U.S. Securities and Exchange Commission (SEC), fulfilling his pre-election promise to fire incumbent Gary Gensler on his first day in office.

But Trump won’t have to fire Gensler at all. The 67-year-old, who has been on the warpath against cryptocurrencies since taking office as SEC chairman in 2021, said he will step down from his post on January 20, when Joe Biden leaves office .

Atkins, a veteran lawyer and businessman with previous experience at the SEC, has a lot of work ahead of him as he steps into the shoes of a man who has become one of the crypto industry’s biggest enemies.

Many expect him to clean up the mess created by Gensler, who is accused of trying to bring down the industry through “regulation through enforcement.”

Hester Peirce, an acting SEC commissioner known as “Crypto Mom” for her pro-crypto stance, said Atkins is the best man for the job.

“We have a lot of work to do at the SEC to advance free markets, capital formation, investor choice, and innovation,” she wrote on X. “I am pleased that Paul Atkins will return to lead the effort.”

We have a lot of work to do at the SEC to advance free markets, capital formation, investor choice, and innovation. I'm delighted that Paul Atkins will be returning to lead the effort. Having worked for him during his last stint at the agency, I cannot think of a better person…

— Hester Peirce (@HesterPeirce) December 4, 2024

How Gensler became “crypto enemy number one”

For context, Gensler is a product of the vagueness of U.S. cryptocurrency laws. Because the law is vague, the SEC has the authority to decide which token is an investment contract. And it has notoriously pursued tokens and NFTs with real-world use cases outside of speculation.

Under Gensler, the regulator has taken a record number of enforcement actions against crypto companies. In 2023, the commission pursued 53% more actions against the industry than in the previous year.

Additionally, during his three years in office, Gensler was responsible for 50% of the enforcement actions the SEC has taken against the crypto sector since 2015, according to crypto venture firm Paradigm.

The $238 million the crypto lobby spent in November’s election supporting pro-industry candidates still pales in comparison to the $429 million the 100-member Blockchain Association lost in its battle with the SEC.

The moral of the story is that regulating cryptocurrencies under current laws is as much a matter of philosophy as it is of law.

By appointing Atkins, who is considered a Bitcoin advocate, Trump is clearly returning the favor for the support of the crypto community. The president-elect is confident that he has chosen the right person for the job.

“Paul is a proven advocate for common sense regulation,” Trump said when announcing the nomination in early December. “He believes in the promise of robust, innovative capital markets that are responsive to the needs of investors…”

‘Solid Choice’

A George Bush-era SEC commissioner, Atkins has the progressive resume Trump could use at the regulator. Since resigning at the end of Bush’s term, Atkins has been an outspoken opponent of Dodd-Frank, a package of rules introduced after the 2008 financial crisis that was intended to make sweeping changes to the U.S. financial regulatory system.

Atkins’ tenure at the SEC also made him an ideal candidate in the Trump era, according to previous reports . The former commissioner opposed heavy fines for companies that violate securities laws. More recently, he has advocated for cryptocurrencies through the lobbying group Token Alliance.

Mason Jappa, CEO of U.S.-based Bitcoin mining company Blockware, called Trump’s nomination of Atkins “a solid choice.”

Consistency – Atkins is known for both,” Jappa told:

“At least crypto will thrive in a neutral regulatory environment, and Atkins, as a libertarian, can bring that to the table, even if he doesn’t end up being radically pro-crypto.”

Jappa said he expects Atkins to “create a clear set of rules that major investors can follow so they take the industry more seriously.”

He noted that the SEC’s approval of Bitcoin and Ethereum spot exchange-traded funds (ETFs) was “a big step in that direction.”

Regulatory Clarity

Some critics seem to fear deregulation under Atkins’ tenure. However, George Georgiades, general counsel for stablecoin payment network Borderless.xyz, said the crypto industry has routinely called for regulatory clarity, not deregulation. It wants an orderly process of rulemaking, he said.

Speaking Georgiades said Atkins is joining the SEC at a “critical time [for] our industry,” and he expects the 66-year-old to make changes that will make America a leader in cryptocurrency adoption.

When asked what changes Atkins could make to promote the crypto industry, Georgiades said:

“It starts with returning to our traditional rulemaking process and establishing meaningful collaboration between the SEC and market participants. This is to ensure that there is regulatory clarity on how to characterize digital assets, define the extent of the SEC’s jurisdiction relative to other U.S. regulators, and strike a balance between consumer protection and the need to encourage innovation.”

Georgiades, a tech lawyer with experience in regulatory compliance, said there are “complex legal issues” regarding the characterization of some crypto assets that need to be reformed, including the design of staking products, stablecoin structures and tokenized real world assets (RWA).

He said such questions require clarity on “whether oversight falls within the SEC’s jurisdiction. If so, how we can include these products in our registration process or exemptions.

Georgiades explained:

“Considering that he Atkins works as a lobbyist for crypto firms and has ties to the Chamber of Digital Commerce, it is very likely that he will develop a clear regulatory framework for the industry.

Could Paul Atkins seek deregulation?

For Slava Demchuk, CEO of compliance and blockchain forensics firm AMLBot:

“Atkins could advocate for deregulation, thereby reducing the compliance burden on crypto companies.”

Demchuk points to the numerous regulators and agencies that currently oversee the crypto industry, including the SEC, the Commodity Futures Trading Commission (CFTC), FinCEN and the IRS.

He said: “Without a consistent regulatory framework or a clear understanding of the responsibilities of each authority, it will be difficult for companies to meet compliance requirements and operate effectively.”

Demchuk told that he expects Atkins to “expand support for crypto services within national banks and simplify integration into traditional financial infrastructure.” He added:

“Considering that he [Atkins] works as a lobbyist for crypto firms and has ties to the Chamber of Digital Commerce, it is very likely that he will develop a clear regulatory framework for the industry,” Kimber told Cryptonews via LinkedIn.

Could Paul Atkins seek deregulation?

For Slava Demchuk, CEO of compliance and blockchain forensics firm AMLBot, “Atkins could advocate for deregulation, thereby reducing the compliance burden on crypto companies.”

Demchuk points to the numerous regulators and agencies that currently oversee the crypto industry, including the SEC, the Commodity Futures Trading Commission (CFTC), FinCEN and the IRS.

He said: “Without a consistent regulatory framework or a clear understanding of the responsibilities of each authority, it will be difficult for companies to meet compliance requirements and operate effectively.”

Demchuk told that he expects Atkins to “expand support for crypto services within national banks and simplify integration into traditional financial infrastructure.” He added:

“The government could advocate for the use of regulatory sandboxes that allow banks to safely experiment with blockchain and digital asset innovations without the constraints of heavy regulatory burdens. He would likely advocate for minimal government intervention…”

Sid Powell, CEO and co-founder of crypto lending platform Maple, said Trump’s choice of Atkins:

“shows that the new administration is not only looking for crypto advocates, but also those who have taken the time to build relationships within the industry.”

“US innovators and startups in crypto/blockchain will be happier under an Atikins regime,” Powell told. “There will be greater pressure for innovative legislation and for regulators and key crypto players to work together rather than grapple with regulatory adversity.”

But all the expected reforms depend on whether Atkins takes the job. The former commissioner is hesitant to leave his consulting firm, Patomak Global Partners, because he believes it will take a lot of work to turn around the SEC, Coindesk reports, citing sources familiar with the matter. Atkins believes Gensler has “mismanaged” the agency, the sources said.