Trump’s new nominee for the Securities and Exchange Commission (SEC) is a win for the cryptocurrency industry, but the expected changes may be slow to materialize.
Article written by: Tom Mitchelhill
Source: Cointelegraph
Article compiled by: Ada, MetaEra
President-elect Donald Trump has chosen pro-crypto entrepreneur and former Securities and Exchange Commission commissioner Paul Atkins to serve as his administration’s next chairman of the regulatory agency, fulfilling his promise to replace current chairman Gary Gensler and prompting delight in the cryptocurrency industry.
Here’s what we know about Atkins and the potential changes he could bring to the crypto industry if he’s confirmed by Congress in 2025, as expected.
From SEC to Patomak and back to SEC
Atkins served as a Republican SEC commissioner from July 2002 to August 2008, serving in the George W. Bush administration.
At the time, he was already in favor of innovation and investment and against bureaucracy:
“The (SEC) must not exclude these investors from our markets through burdensome regulation or eat up the fruits of their investment through ridiculous mandates,” Atkins told a 2007 forum for corporate directors.
According to U.S. law firm Anderson PC, Atkins is known for his emphasis on "proportionality" in enforcement actions. He advises against imposing large fines on companies based on individual violations and focuses on complex and nuanced cases rather than prioritizing large numbers of enforcement actions.
“Under his leadership, the SEC is likely to move away from prioritizing high-profile penalties,” attorneys at Anderson LLP wrote.
This week, Chamber of Digital Commerce President Cody Carbone said on the Unchained podcast that one of the most promising things about Atkins is his familiarity with current SEC staff, including current Republican SEC Commissioners Hester “Crypto Mom” Peirce and Mark Uyeda.
Peirce and Uyeda were both on Atkins’ staff during his six years on the job.
“As we look ahead to how the commission will work in the future, they have built a rapport and are ready to roll up their sleeves and jump into the fray together,” Carbone said.
After leaving the SEC, Atkins founded the financial advisory firm Patomak Global Partners in 2009. Patomak specializes in regulatory consulting, risk compliance services, and enforcement and litigation support services.
Notably, Patomak signed up as a client of FTX, an exchange founded by Sam Bankman-Fried, in January 2022, about 10 months before the exchange went bankrupt.
In a 2023 podcast, Atkins said the only reason the FTX crisis became an "international scandal" was because the United States did not have clear enough rules to accommodate digital assets. However, he also admitted that Sam Bankman-Fried's fraud was the main cause of FTX's collapse.
Since 2017, Atkins has been co-chair of the Token Alliance, a cryptocurrency lobbying group affiliated with the Chamber of Digital Commerce that aims to introduce clear regulations and promote mainstream adoption of crypto assets.
He has been a staunch supporter of digital assets and innovation, and has repeatedly publicly opposed the "enforcement regulation" approach taken by the SEC under Gensler's leadership toward the cryptocurrency industry.
In 2019, Atkins testified before the U.S. Congress, proposing a restructuring of the SEC to strike a balance between protecting investors and reducing the regulatory burden on emerging industries.
SEC staff turnover continues
While Trump nominated Atkins to be the next SEC chairman, it’s not a done deal. Congress and the Senate can vote against the president’s nominations, which is likely to happen with some of Trump’s more controversial picks.
However, Carbone expects Atkins’ nomination to be confirmed in March, depending on how quickly the Senate Banking Committee processes other department and agency nominations.
The SEC board is made up of five commissioners. Currently, the SEC slate includes two Republicans — Peirce and Uyeda — and three Democrats — Caroline Crenshaw, Gary Gensler and Jaime Lizarraga.
However, both Gensler and Lizarraga recently announced they will be leaving the agency in January.
Meanwhile, Crenshaw, a commissioner who has been critical of cryptocurrencies and has taken a dissenting stance on approving a bitcoin ETF, has had her re-election vote postponed indefinitely, leaving her position at the agency uncertain.
When Trump takes office next year, the new administration will give the SEC a three-member Republican majority. Some believe Trump may even break with tradition and nominate a fourth Republican commissioner to replace Lizarraga; however, this is just speculation at this point.
What impact will Atkins' appointment have on cryptocurrency regulation?
Charlyn Ho, founder of Rikka Group, told Cointelegraph that Atkins will undoubtedly bring “big changes” to the way the crypto industry is regulated, but it won’t happen all at once.
Ho believes that the U.S. is unlikely to follow in Europe’s footsteps and introduce a comprehensive regulatory regime like the Markets in Crypto-Assets Regulation (MiCA). Instead, she expects the SEC under Atkins to focus more on providing guidance and removing regulatory barriers.
“I would hazard a guess that Trump and Atkins are likely opposed to creating new regulations, and instead seek to increase clarity around where the cryptocurrency industry can operate.”
That being said, there are a number of crypto bills currently under consideration, including stablecoin legislation and FIT 21, which provides a regulatory framework for the cryptocurrency industry and has already passed the House of Representatives.
Whatever happens, Atkins is unlikely to follow the lead of his predecessor, Gensler, who was criticized for being too aggressive in regulating cryptocurrencies and for going beyond the SEC’s congressional authority to issue “enforcement regulations.”
“The common theme in lawsuits like Coinbase and Ripple is that the SEC overstepped its authority,” she said.
"Technically, Congress is supposed to pass laws. These laws delegate the power of interpretation to administrative agencies such as the SEC, but they can only interpret within the scope of the delegation," Ho said.
On February 23 last year, Atkins said in the (Free The People) podcast that if the US SEC was less combative, there would be more opportunities for industry growth in the United States.
“If the agency was more accommodating and was forthcoming with different companies, I think it would be much better to deal with these things within the United States than abroad,” Atkins said, citing Binance’s forced payment of a $4.3 billion fine as a reason many cryptocurrency companies choose to stay outside the United States.
In the same podcast, Atkins also expressed support for Commissioner Peirce’s (Token Safe Harbor Act) — which was reintroduced in 2021 — which would provide a grace period for cryptocurrency developers during which they would not have to immediately register with the SEC.
It is unlikely that Atkins will make sweeping changes on his first day in office.
Despite Atkins’ apparent support for cryptocurrencies, Ho warned that industry experts may be overly optimistic if they expect swift and comprehensive reforms.
“The precedent set by Gensler is still to be followed, and just because a new commissioner is appointed doesn’t mean all the previous legal work and precedent disappears,” Ho said.
Ho said that given the SEC’s existing slew of lawsuits, including against Kraken, Coinbase, Ripple and others, neither Atkins nor the agency can simply drop everything and take immediate action in support of cryptocurrencies.
“If Atkins wants to change the SEC’s position, he can’t just make a simple announcement, but must go through a legal process and have some reasons to change the SEC’s position.”
"If they are the plaintiff, they can drop the lawsuit entirely. But if they are in the middle of a litigation process, the commissioner does not have unfettered discretion to completely change everything in that process."
"He will still be subject to certain restrictions."