The U.S. Securities and Exchange Commission (SEC) is signaling a pivotal shift in its approach to cryptocurrency regulation under new Chair Paul Atkins. In a landmark roundtable held at the agency’s Washington, D.C. headquarters, Atkins declared that crypto innovation “has been stifled for the last several years” and emphasized the urgent need for regulatory modernization.
The event, hosted by the SEC’s newly formed Crypto Task Force, marked its first major public convening since its launch. Industry leaders, legal experts, and top SEC officials gathered to discuss one of the most pressing issues in digital asset regulation: crypto custody.
A New Era of Collaboration
Atkins opened the session alongside SEC Commissioners Caroline Crenshaw, Mark Uyeda, and Hester Peirce—underscoring a unified push toward a more cooperative regulatory environment. This stands in stark contrast to the adversarial tone that characterized much of the prior administration's crypto policy under former Chair Gary Gensler.
“The market itself seems to indicate that the current framework badly needs attention,” Atkins stated during his keynote address. He acknowledged the agency’s broad authority to act independently while expressing openness to congressional input, noting, “We have ample room to maneuver.”
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This sentiment echoes broader changes sweeping through Washington. With the Trump administration taking a notably supportive stance on blockchain innovation, the SEC is aligning with executive-level momentum to foster responsible growth in the sector.
Regulatory Shifts Paving the Way
Recent actions by the SEC have already begun dismantling previous barriers:
- In January, the agency rescinded Staff Accounting Bulletin 121 (SAB 121), a controversial rule that classified crypto holdings as liabilities on bank balance sheets—effectively discouraging traditional financial institutions from offering crypto services.
- In February, the SEC issued guidance clarifying that most meme coins do not qualify as securities, reducing legal uncertainty for thousands of decentralized projects.
Commissioner Hester Peirce, a long-time advocate for balanced crypto policy, welcomed these developments: “Bye, bye SAB 121! It's not been fun,” she tweeted at the time—a sentiment widely celebrated across the industry.
These moves reflect a growing recognition that outdated frameworks can hinder rather than protect market development.
Focus on Crypto Custody: Security vs. Accessibility
A central theme of the roundtable was digital asset custody—how cryptocurrencies are stored, secured, and managed by institutions and individuals alike. With rising concerns over hacks, fraud, and operational risk, clear custody standards are essential for institutional adoption and investor protection.
Participants included executives from leading firms such as:
- Anchorage Digital Bank
- Fidelity Digital Assets
- Kraken
- BitGo
- Fireblocks
- Copper Technologies
They highlighted key challenges in offering compliant custody solutions under existing securities laws. One major issue is the lack of clarity around whether certain crypto assets require third-party custodians or if self-custody—where users hold private keys themselves—is legally permissible and safe.
Peirce stressed the importance of differentiation: “A regulatory approach should recognize the differences across qualified custodians exist for some crypto assets. But for others, self custody might be the safer option.”
This nuanced perspective suggests regulators are beginning to appreciate the technical realities of decentralized systems—where control lies with users, not intermediaries.
Revisiting the Controversial Custody Rule
The SEC is now reevaluating its previously proposed crypto custody rule, which many in the industry criticized as impractical for blockchain-native assets. The original proposal, introduced under Gensler, failed to account for cryptographic proofs and decentralized verification mechanisms inherent to most digital tokens.
Friday’s discussion signals renewed effort to craft a workable compromise—one that ensures investor safeguards without stifling innovation.
“The Commission must grapple with these issues,” Peirce warned. “If we fail to do so, we prevent regulated entities from serving their customers.”
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Balancing Innovation and Investor Protection
While enthusiasm grows around deregulatory trends, regulators remain cautious about risks. Decentralized networks pose unique challenges: no central authority means no single point of accountability during breaches or failures.
Yet, as Atkins noted, rigid application of legacy financial rules could exclude transformative technologies from mainstream finance. The goal now is to build a framework that allows innovation to thrive within clear guardrails.
One area of tension remains enforcement against foreign entities. Atkins affirmed the SEC’s intent to hold international companies accountable to U.S. standards—including potential delisting of non-compliant Chinese firms.
FAQs: Understanding the Shift in Crypto Regulation
Q: What did SEC Chair Paul Atkins say about crypto innovation?
A: Atkins stated that innovation in the crypto space has been “stifled for the last several years” and called for urgent updates to outdated regulatory frameworks.
Q: What is the SEC Crypto Task Force?
A: It’s a newly established initiative within the SEC focused on engaging industry stakeholders to develop practical, forward-looking policies for digital assets.
Q: Why is crypto custody important?
A: Custody determines how digital assets are stored and protected. Clear rules help institutions offer secure services while ensuring compliance with investor protection laws.
Q: Has the SEC changed its stance on meme coins?
A: Yes. In February 2025, the SEC clarified that most meme coins are not considered securities under federal law—providing significant relief to developers and traders.
Q: What happened to SAB 121?
A: The SEC rescinded SAB 121 in January 2025, removing a major barrier that prevented banks from offering crypto custody services due to balance sheet liability concerns.
Q: Is self-custody allowed under current rules?
A: While not explicitly prohibited, regulatory ambiguity remains. The SEC is currently assessing how to formally recognize self-custody as a valid and secure option for certain assets.
Looking Ahead: A Collaborative Future
The roundtable represents more than just policy discussion—it symbolizes a cultural shift within the SEC. From confrontation to collaboration, the agency appears committed to listening before legislating.
As blockchain technology continues to evolve, so too must regulation. The path forward requires flexibility, technical understanding, and ongoing dialogue between policymakers and innovators.
👉 Stay ahead of regulatory changes and secure your crypto future now.