Blocked by Wall Street backlash? US SEC Chair: "Caution needed on crypto regulatory exemptions"

Doohyun Hwang

Summary

Paul Atkins, chair of the US SEC, said the announcement on regulatory exemptions for crypto firms could be delayed.
The exemption plan focuses on an enforcement-action carve-out for certain crypto activities such as tokenized securities and DeFi, and the industry had expected it to reduce regulatory uncertainty.
Key Wall Street figures and SIFMA warned that broad exemptions could weaken investor protection and disrupt markets, and Atkins said congressional legislation, including the Crypto Market Structure Bill, is a key variable.

Paul Atkins, chair of the US Securities and Exchange Commission (SEC), suggested he may delay the timing of an announcement on sweeping regulatory exemptions for virtual asset (cryptocurrency) firms.

According to Decrypt on the 29th (local time), when asked at a crypto-related event jointly hosted with leadership of the Commodity Futures Trading Commission (CFTC) about when the exemption plan would be finalized, Atkins avoided giving a definitive answer, saying, "I can’t guarantee it will come out by the end of this month or next month."

Atkins said, "We’re still working on it (the exemption plan)," but stressed that "a cautious approach is necessary." This contrasts with his stance last month, when he pledged, "I will roll out the exemption plan in January," vowing to push it through quickly regardless of congressional legislative delays or a government shutdown.

The proposal centers on assurances that the SEC will not take enforcement action against certain areas of crypto activity, such as tokenized securities and decentralized finance (DeFi). The crypto industry had expected this to ease regulatory uncertainty.

Markets view Atkins’ sudden change in tone as the result of pressure from Wall Street.

Recently, major Wall Street figures including JPMorgan, Citadel, and the Securities Industry and Financial Markets Association (SIFMA) reportedly met with officials from the SEC’s crypto task force (TF) to convey concerns about the broader impact that wide-ranging regulatory exemptions could have across the financial system. In meeting materials, SIFMA made its opposition clear, saying, "A broad exemption for tokenized trading activity could weaken investor protection and cause market disruption."

The status of legislation in Congress has also emerged as a variable. Atkins referenced the 'Crypto Market Structure Bill' currently pending in the Senate, saying, "It would be good to have direction from Congress." However, when asked whether he would simply wait for the bill’s passage, he replied, "Not necessarily," adding, "There are many variables in the situation," leaving room for flexibility.