SEC Chairman's Nine Talks on AI and Crypto Innovation: Remembering the Mission and Returning to the Facts

Author: Zhang Feng

At the fourth Investor Advisory Committee meeting in 2025, Paul Atkins, Chairman of the U.S. Securities and Exchange Commission (SEC), delivered a highly anticipated speech. This speech was not only a summary of his year but also a systematic exposition of the future development path of the U.S. capital market.

Faced with the impact of multiple technological waves such as blockchain technology, asset tokenization, and artificial intelligence, Atkins clarified the SEC's regulatory mission and principles, emphasizing the need to "ensure that public companies become an attractive option for more businesses," to pave a compliant path for the on-chain transformation of financial markets, and to avoid "over-regulatory" approaches to emerging technologies. We will focus on nine core points from his speech to reveal the SEC's regulatory thinking and strategic direction in the new era.

I.SECThe Chairman's primary task: Reshaping the attractiveness of public companies

Atkins emphasized at the beginning of his speech that one of his core tasks is to "ensure that public companies become an attractive option for more businesses. This statement reflects the SEC's deep concern about the current structure of the U.S. capital market and its global competitiveness. As the main players in the capital market, the vitality and health of public companies directly impact resource allocation efficiency, investor confidence, and national financial competitiveness. In recent years, with the diversification and convenience of financing channels in the private market, more and more companies have chosen to postpone or abandon their IPOs, resulting in a shrinking number of public companies. Therefore, the SEC needs to revitalize companies' willingness to go public and consolidate the global leadership of the U.S. public market by optimizing the regulatory framework, reducing compliance burdens, and improving market transparency and predictability. II. Rule Modernization: Promoting the Evolution of the Capital Market Towards "On-Chain Operation" Faced with the rapid development of distributed ledger technology (DLT) and asset tokenization, Atkins explicitly stated that the SEC must promote rule modernization to enable the market to "operate on the blockchain." Traditional securities issuance, trading, and settlement systems rely on multiple layers of intermediaries. While this reduces information asymmetry and operational risks to some extent, it also brings problems such as inefficiency, high costs, and insufficient transparency. Public blockchain technology holds the promise of fundamentally restructuring this system, enabling the entire process of securities issuance, holding, trading, and services to be on-chain. The SEC's task is not to hinder this process, but to provide compliant development space by revising outdated rules, ensuring that the United States maintains a leading position in the construction of the global on-chain capital market. III. Public Blockchain and Tokenization: Restructuring the Relationship Between Issuers and Investors Atkins points out that public blockchain and tokenization can not only simplify the transaction process, but also "simplify the entire relationship between issuers and investors." In the traditional securities holding system, shareholder identification, voting rights exercise, and dividend distribution all require multiple intermediaries such as custodian banks and brokers, making the process complex and prone to errors. Tokenized securities, however, can automate governance functions through smart contracts, such as proxy voting, real-time dividend distribution, and shareholder communication, significantly improving efficiency and transparency. This technology-driven reshaping of direct relationships is a core change that the SEC must fully consider when formulating new regulations. IV. Three Main Models of Tokenization In his speech, Atkins systematically outlined three tokenization models currently emerging in the market, demonstrating the SEC's high level of attention to industry practices: Direct On-Chain Issuance Model: Companies directly issue equity tokens on a public distributed ledger. These tokens, as programmable assets, can be embedded with governance functions such as compliance conditions and voting rights, enabling direct holding by investors and minimizing intermediaries. On-Chain Rights Mapping Model: A third-party institution maps the ownership of traditional stocks into on-chain equity certificates, allowing investors to indirectly enjoy the economic and governance rights of the underlying assets by holding on-chain tokens. This model retains the traditional legal structure to some extent while introducing on-chain liquidity. Synthetic Product Model: This involves issuing synthetic tokenized products that reflect the stock price performance of listed companies. These products are mostly issued in overseas markets, reflecting the strong demand from global investors for on-chain financial infrastructure. The SEC needs to design differentiated regulatory schemes for different models, encouraging innovation while preventing risks. V. The Predecessor's Wrong Practices: Overexpansion and Suppression of Innovation Atkins, without naming names, criticized the previous committee's flawed approach to regulating on-chain markets, namely, attempting to broaden the legal definitions of "trading" and "exchange" to include on-chain protocols and even basic communication protocols within the traditional exchange regulatory framework. This approach, "lacking restrictive principles," not only exceeded the legislative authority granted by Congress but also created regulatory uncertainty, suppressing technological innovation and market development. Atkins emphasized that the SEC should not force new business models into the old framework through "brute force," but should instead construct a regulatory logic that matches their technological nature and functional realities. VI. Properly Utilizing Exemptions: Providing Transitional Space for Innovation Under the Securities Exchange Act of 1934, the SEC is granted broad exemptions. Atkins proposed that these powers should be used "responsibly," providing a safe testing ground for on-chain financial innovation by establishing a "limited, time-bound, transparent, and robust investor protection-based" exemption framework. This "regulatory sandbox" approach allows the market to explore new models in a controlled environment while also giving the SEC time to accumulate regulatory experience and develop long-term rules. Exemptions are not laissez-faire, but rather a phased and conditional approach to promote the orderly evolution of the market. VII. Regulating Decentralized Protocols: Avoiding a "Square Peg in a Round Hole" Atkins explicitly opposes regulating decentralized protocols in the same way that centralized intermediaries are regulated. He believes that true decentralized protocols rely on code rules and community governance, possessing characteristics such as transparency, censorship resistance, and high resilience. Forcibly imposing traditional broker-dealer regulatory requirements would not only fail to achieve effective supervision but would also stifle their innovative vitality. However, this does not mean that on-chain finance can become a "lawless zone." The SEC must distinguish between "true decentralized finance" and "centralized entities merely cloaked in blockchain technology" to prevent the latter from exploiting regulatory arbitrage to harm investor interests. Regulation should be based on "functional reality," not on the outward appearance of organizational form. Atkins outlines three basic principles for regulating on-chain capital markets: Technological neutrality and functional regulation: Rules should be based on the substance of economic activity, not on the label of technology. Innovation Inclusivity and Risk Control: While encouraging the application of technology, it is essential to ensure that transparency, accountability, and investor protection are not weakened by technological change. Global Collaboration and Local Responsibility: The United States should actively lead international regulatory dialogue to prevent fragmentation and arbitrage, while upholding high standards in its domestic market. These principles all point to one goal: to ensure that the United States continues to maintain its position as "the world's most dynamic, transparent, and trustworthy market" in the blockchain era. IX. Listed Companies Information Disclosure: Adhering to Principles-Oriented Approach, Opposing List-Based Regulation When discussing the impact of artificial intelligence on businesses, Atkins demonstrated a clear stance of "principle-based regulation." He opposes issuing specific disclosure lists for every new technology, advocating for reliance on the existing information disclosure framework based on the principle of materiality. Companies should independently determine whether AI will have a significant impact on their business model, financial condition, and risk profile, and provide valuable information to investors accordingly. This flexible regulatory approach avoids the instability caused by frequent rule revisions while also granting companies sufficient disclosure flexibility, reflecting the SEC's trust in the market's self-regulating capabilities. Conclusion: Returning to the Mission, Leading the Future Atkins' entire speech conveyed a clear signal: the SEC is attempting to find a new balance between protecting investors, maintaining market integrity, and encouraging technological innovation. Its core idea is "returning to the mission"—not responding to change by expanding power, but by optimizing rules, clarifying boundaries, and making good use of tools to ensure that regulation better serves market development and the public interest. In today's era of overlapping waves of blockchain and artificial intelligence, this regulatory philosophy of "mission-driven, principle-first, and inclusive innovation" may be the key to the long-term competitiveness of the US capital market. The SEC's role is not a boulder blocking the technological torrent, but rather a riverbed guiding its compliant flow—preventing both excessive expansion and fostering a healthy ecosystem.