SEC Chair's Bold Prediction: The Global Financial On-chain Era Has Arrived

Original Title: SEC's Paul Atkins touts 'tokenization' as key to modernizing US markets

Original Source: Fox Business

Original Translation: Azuma, Odaily Planet Daily

Editor's Note: On December 3rd, Securities and Exchange Commission Chairman Paul Atkins participated in an interview at the New York Stock Exchange with the financial media outlet Fox Business's program Mornings with Maria. During the interview, Atkins told Fox reporter Maria Bartiromo that he expects the entire U.S. financial market to potentially migrate to the blockchain in the coming years.

Since officially assuming the role of SEC Chairman on April 22nd this year, Paul Atkins has repeatedly expressed positive sentiment towards cryptocurrency from a regulatory perspective. He has specifically mentioned that a core priority during his tenure is to establish a reasonable regulatory framework for the cryptocurrency market, formulate clear rules for the issuance, custody, and trading of cryptocurrencies, and consistently curb illegal activities.

Below is the full text of Atkins' interview content, translated by Odaily Planet Daily.

Interview Transcript

Opening Remarks: The SEC is dedicated to formulating new rules and reforms to enhance economic security and diversify investment opportunities. SEC Chairman Paul Atkins participated in an interview at the New York Stock Exchange, elaborating on the related vision.

· Maria: Mr. Chairman, thank you very much for accepting our interview.

Atkins: Thank you, Maria. It's a pleasure to meet with you today.

· Maria: Since I first came to the New York Stock Exchange, becoming the first person to do a live broadcast on the New York Stock Exchange platform, it has been over 30 years. In these 30 years, we have seen tremendous changes. So how is today's U.S. capital market different from what it was 30 years ago?

Atkins: The change has been revolutionary. Obviously, technological innovations such as electronic trading, data processing, and others have gradually replaced the traditional manual trading floor and operational methods of the past. Everything is now electronic. Interestingly, 30 years ago, I was a young SEC staffer, and now it is my third time back at the SEC.

In the early 1990s, you may find it hard to believe that at that time, retail investors held over half of the publicly listed companies' total market cap, and now, of course, it's completely different... Individual investors mostly hold assets indirectly through pension funds, ETFs, mutual funds, and such vehicles, but they are still a crucial part of the market. Retail investors are still very important. But the whole landscape has changed. The market is now faster, more dynamic, and clearly more globalized. The next wave of change will come from digital assets, meaning the digitization and tokenization of the market. I believe this will significantly reduce risk and increase predictability through on-chain transparency, thus bringing immense benefits.

· Maria: Please elaborate on the concept of tokenization. What does it mean for investors to transition from directly holding stocks or investing through index funds, ETFs, to holding tokens representing partial ownership of a company? What is the development path?

Atkins: Tokenization is the use of smart contracts or on-chain tokens to represent some form of underlying security. Tokenized securities are essentially still securities, hence must comply with SEC regulations.

The core advantage of tokenization is that if the asset exists on the blockchain, ownership structures and asset attributes are highly transparent. Whereas currently, publicly listed companies often do not know exactly who their shareholders are, where they are located, and where their shares are held.

Tokenization also aims to achieve "T+0" settlement, replacing the current "T+1" transaction settlement cycle. In principle, an on-chain Delivery versus Payment (DVP) / Receipt versus Payment (RVP) mechanism can reduce market risk, enhance transparency, and the time gap between current clearing, settlement, and fund delivery is one of the sources of systemic risk.

· Maria: Do you think this is an inevitable trend in financial services? Have mainstream banks and brokerages been moving toward tokenization?

Atkins: Absolutely.The world may not even need 10 years... perhaps it will be a reality in just a few years. I believe that market modernization is positive, but the problem lies in the recent SEC's departure from historical traditions—historically, although the SEC was not always an innovation pioneer, it at least closely followed the market, but in recent years, it has almost stood against market innovation. This situation must end. We are actively embracing new technologies to ensure that the United States remains at the forefront in areas such as cryptocurrency.

The times are changing, and we need to introduce new technology domestically to allow it to flourish under U.S. regulations. FTX's collapse did not affect customer segregated accounts protected by CFTC rules — a testament to good regulatory practices that protect investors.

· Maria: What specific implications will this have for the SEC's work?

Atkins: We have renamed our existing "Crypto Task Force" to "Project Crypto."

A few weeks ago, I gave a speech proposing a new classification framework to clarify which assets qualify as securities. Tokenized securities clearly fall under securities, while digital commodities, digital utilities, digital collectibles, etc., do not. We will continue to follow the "Howey Test" established by the Supreme Court in 1946 to define what constitutes a security.

Additionally, we plan to introduce an "Innovation Safe Harbor" policy next month, allowing companies to conduct concept validation within controlled parameters such as time, user numbers, fund size, etc., and then proceed with product marketization after obtaining SEC approval. We must provide investors with a clear compliance framework and offer innovators a certain environment for product development.

· Maria: Have we discussed enough about cryptocurrency-related legislation? Stablecoins already have clear rules. Is the legislation for digital assets similar, or is it different?

Atkins: The Genius Act has been passed, which is an excellent first step, marking the U.S.'s formal recognition of a digital product (stablecoin). We appreciate Congress's passage and the President's signing. Currently, a market structure bill (Clarity Act) has been approved by the House and is waiting for further progress in Congress.

Meanwhile, the SEC and CFTC are actively coordinating their regulatory frameworks. For a long time, the two agencies have had disagreements, leading to the demise of many potential products in the regulatory gap. We must work together, with the CFTC having expertise in the futures and derivatives markets, and the SEC understanding the spot market, there is no reason why the two should not collaborate. I believe that cooperation will make the market more efficient and secure.

· Closing: With that, Atkins concluded his remarks, and FOX's in-house analysts followed up with additional comments, mentioning T+0 settlement, asset democratization, and Larry Fink's recent viewpoints.

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