The crypto industry will be listening closely when Paul Atkins, President Trump’s pick to run the Securities and Exchange Commission, testifies before the Senate Thursday in his nomination hearing.
Atkins is expected to reexamine and revise a lot of what the agency did during the Biden administration, notably its approach toward regulating digital assets.
For years, Atkins has made it clear he favors clearer regulations of cryptocurrencies that don’t impose unnecessary oversight — and he intends to repeat that point before Senate lawmakers Thursday.
“I have seen how ambiguous and non-existent regulations for digital assets create uncertainty in the market and inhibit innovation,” he said in his prepared remarks for his testimony.
“A top priority of my chairmanship will be to work with my fellow commissioners and Congress to provide a firm regulatory foundation for digital assets through a rational, coherent, and principled approach.”
Wall Street will also be listening for any signs of more favorable treatment. Atkins in the past has criticized the Dodd-Frank legislation that was enacted after the 2008 financial crisis to rein in the biggest US banks.
Trump Treasury Secretary Scott Bessent has made it clear he wants to lift constraints on lenders and overhaul the current regulatory framework as a way of increasing lending activity in the US.
Paul Atkins speaking in 2008, when he was a Republican SEC commissioner. Photo: REUTERS/Molly Riley (UNITED STATES) ·REUTERS / Reuters
Atkins previously served as a Republican SEC commissioner from 2002 to 2008 and in 2009 founded Washington consulting firm Patomak Global Partners, which helps companies deal with US regulators.
This week, he said he would step down and divest from his consulting firm if confirmed, giving up a stake valued at more than $25 million. He said so while releasing financial disclosures and an ethics statement on Tuesday.
Sen. Elizabeth Warren is expected to press Atkins on what she sees as conflicts of interest from his work as a regulatory consultant for big banks and financial firms.
She sent Atkins a 34-page letter ahead of Thursday’s Senate Banking Committee hearing pressing him on those perceived conflicts, as well as his decisions in setting regulations before the 2008 financial crisis and his involvement in the failed cryptocurrency exchange FTX.
“This record raises questions about your judgement and your ability to serve as an effective SEC Chair if you are confirmed,” Warren wrote. “I ask that you appear at your nomination hearing prepared to answer these questions and that you provide complete written answers prior to any Banking Committee vote on your nomination.”
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Warren’s questions as outlined in the letter include his views on crypto, such as how he believes the so-called Howey test applies to digital asset tokens.
The SEC’s framework for evaluating digital assets as securities has long relied on the Howey test, which has its origins in a 1946 Supreme Court case dealing with tracts of Florida orange groves sold by W.J. Howey Co. and leased back to the company.
U.S. Senator Elizabeth Warren (D-MA). REUTERS/Annabelle Gordon/File Photo ·Reuters / Reuters
The Supreme Court labeled these leaseback deals as investment contracts, meaning they needed to be registered with the SEC.
Gary Gensler, the last SEC chair, believed that the vast majority of cryptocurrencies were securities based on this test and, therefore, required aggressive oversight by the SEC.
The crypto world disagreed, and that split was the source of considerable tension during the Biden administration.
Gensler and the SEC sued many of the biggest crypto exchanges, accusing them of trading securities without registering with the agency. Gensler also declined to write customized rules for the crypto industry, arguing many digital assets are securities that should have to comply with rules already on the books.
“Gary Gensler’s tenure was a disaster for American innovators, investors, and job creators,” said Sen. Tim Scott, the Republican chair of the Senate Banking Committee.
“I will work with Paul Atkins to improve access to capital for entrepreneurs nationwide, right-size regulations for small and newly public companies, create new avenues for hardworking Americans to invest in their communities, and provide long-overdue clarity for digital assets.”
Even before Atkins’s confirmation hearing, the SEC has already started to back away from the aggressive approach of the last administration and unwind certain actions.
The SEC has dropped more than 10 enforcement cases against high-profile crypto firms, including US exchange Coinbase (COIN), while also declaring many meme coins to be exempt from securities laws and reversing an accounting bulletin that made it difficult for banks to custody crypto.
It also launched a task force led by SEC commissioner Hester Peirce to study a new regulatory framework governing the industry.
“I’m hoping that we can get to a place,” Peirce told Yahoo Finance in an interview last month, “where we have greater clarity around [a legal framework]that is workable, that is consistent with the statute, but also enables people to figure out what something is categorized … without hiring lots of lawyers and having the fear of litigation hanging over them.”
SEC commissioner Hester Peirce, in 2017. REUTERS/Joshua Roberts ·REUTERS / Reuters
Trump himself has already signed executive orders that benefit the industry, including the creation of a strategic bitcoin (BTC-USD) reserve, and has pledged to help push through legislation that the industry favors.
At the same time, he has existing interests in other crypto ventures that benefit if the value of digital assets rise.
CCC – CoinMarketCap•USD
As of 10:17:00 AM UTC. Market Open.
Just before Trump’s inauguration, his team launched an official meme coin for the 47th president (TRUMP) and one for First Lady Melania Trump (MELANIA) on the Solana blockchain.
His namesake Trump Media & Technology Group (DJT) announced Monday that it would partner with trading platform Crypto.com to launch exchange-traded funds that will include a “unique ETF basket of cryptocurrencies.”
World Liberty Financial, a cryptocurrency venture Trump helped launch last year, also announced Tuesday that it plans to launch USD1, a stablecoin pegged to the US dollar.
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