SEC Chair Paul Atkins Signals Shift in Enforcement and Digital Asset Policy
Commentary by Steven Lofchie
SEC Chair Paul Atkins outlined plans for a less punitive enforcement strategy and urged development of tailored rules for digital assets.
In comments to the Financial Times, Mr. Atkins said the SEC should reserve its toughest actions for "crooks" who defraud investors, rather than "bash[ing] down [the] door" over technical violations. He argued that recent SEC enforcement was "not grounded in precedent or predictability" and pledged to restore due process and notice in regulatory actions. He criticized the sweeping fines imposed on banks and brokers for record-keeping lapses, saying regulators should instead give firms time to correct deficiencies before imposing penalties. He added that consistent record-keeping standards across the industry are long overdue and essential for fairness.
While Mr. Atkins declared that most tokens are not securities, he also stated that the SEC should adopt rules that would allow tokenized stocks and bonds to trade continuously on blockchain platforms. He warned firms already offering such products to exercise caution, stressing that securities laws apply.
Commentary
To reiterate Mr. Atkins' remarks, there is simply no ethical justification for the level of fines that the SEC imposed on broker-dealers for recordkeeping failures that were not connected to any injury to customers or to a conscious attempt to hide information from the regulators. The fines were simply a raw exercise of power, which also allowed the SEC to boast in the press as to its prowess in collecting fines.