By Hannah Lang and Douglas Gillison
(Reuters) -The head of the U.S. securities regulator unveiled sweeping plans to overhaul capital markets regulations on Thursday to accommodate cryptocurrencies and blockchain-based trading, in a major win for the digital asset industry, which has long pushed for tailored rules.
Securities and Exchange Commission Chair Paul Atkins laid out numerous pro-crypto plans in remarks delivered in Washington, including that he has directed commission staff to craft guidelines to determine when a crypto token is a security as well as proposals for a wide range of disclosures and exemptions.
Atkins also said he has asked SEC staff to work with firms looking to offer tokenized securities — blockchain-based shares of stocks or funds that have become an increasing focus of many major crypto players.
“This represents more than a regulatory shift — it is a generational opportunity,” Atkins said in a speech before the America First Policy Institute, a think tank that was created to support President Donald Trump’s policy agenda.
If enacted, Atkins’ proposals would represent a broad shift for U.S. securities regulation, potentially enabling crypto to become more enmeshed with traditional finance.
Details of his plans for crypto come just a day after a cryptocurrency working group formed by Trump called on the SEC to create new rules specific to digital assets and outlined the administration’s stances on market-defining crypto legislation.
In a landmark report, the White House encouraged the SEC and the Commodity Futures Trading Commission to use their existing authorities to “immediately enable the trading of digital assets at the federal level.”
On the campaign trail last year, Trump courted crypto cash by pledging to be a “crypto president” and promote the adoption of digital assets.
That is in stark contrast to former Democratic President Joe Biden’s regulators, who, in a bid to protect Americans from fraud and money laundering, cracked down on the industry. The Biden administration’s SEC sued exchanges Coinbase, Binance, and dozens more, alleging they were flouting U.S. laws. Trump’s SEC has since dropped those cases.
Influential crypto executives had accused the Biden administration of being hostile to digital assets, and routinely expressed frustration with the lawsuits Biden’s SEC brought against several crypto companies, many of which alleged that most crypto tokens were unregistered securities.
‘PROJECT CRYPTO’
Atkins, who worked with crypto firms in recent years before heading the SEC, said the agency’s crypto rulemaking will be housed under a new initiative dubbed “Project Crypto,” which he said will seek to broadly modernize securities rules and regulations.
Project Crypto will move to swiftly implement the White House’s recommendations laid out in Wednesday’s report, Atkins said. Those include establishing an “innovation” exemption from securities laws to allow market participants to engage in new business models, and providing guidance as to how digital assets can be considered commodities.
Atkins said he has asked SEC staff to draft “clear and simple rules of the road” for crypto distributions, custody and trading, and that in the meantime, the regulator will consider using interpretative and exemptive authorities to provide regulatory flexibility for crypto issuers, exchanges and other intermediaries before new rules are formally adopted.
Atkins also said that most cryptocurrencies are not securities, a designation that requires registration with the SEC along with certain disclosures. Crypto firms have tried to avoid that designation, because current regulations require securities to be traded separately from other assets, like commodities.
But that could soon change, Atkins said, adding that he has directed SEC staff to develop a framework that allows for certain crypto assets that are deemed to be securities to be traded alongside tokens that are not securities.
The extensive agenda Atkins laid out for crypto on Thursday is a major change in fortunes for the crypto industry, which spent millions of dollars in last year’s election to support Trump and other Republican congressional candidates.
Atkins’ plans for crypto answer nearly all of the crypto industry’s major wishlist items.
The crypto sector has for years argued that existing U.S. regulations are inappropriate for cryptocurrencies and has called for Congress and regulators to write new ones that clarify when a crypto token is a security, commodity, or falls into another category, such as stablecoins.
Trump’s support for the crypto industry has sparked conflict-of-interest concerns, which at times have threatened to derail congressional crypto legislation that the industry has said is critical to its future.
Trump’s family has launched cryptocurrency meme coins, and the president also holds a stake in World Liberty Financial, a crypto platform. The White House has denied that any conflicts of interest are present.
(Reporting by Hannah Lang in New York; Editing by Pete Schroeder and Aurora Ellis)
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