US SEC Chairman Makes Bold Prediction: The Era of Global Financial On-Chain Has Arrived

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

Source: Fox Business

Translated by: Azuma, Odaily

Editor's Note: On December 3, Paul Atkins, Chairman of the U.S. Securities and Exchange Commission, was interviewed by FOX's financial program "Mornings with Maria" at the New York Stock Exchange. During the interview, Atkins told FOX reporter Maria Bartiromo that he expects the entire U.S. financial market could migrate on-chain in the coming years.

Since officially taking office as SEC Chairman on April 22 this year, Paul Atkins has repeatedly released positive regulatory signals regarding cryptocurrency, and has clearly stated that his core priority during his term is to establish a reasonable regulatory framework for the crypto asset market, formulate clear rules for the issuance, custody, and trading of cryptocurrencies, while continuously curbing illegal activities.

The following is the full text of Atkins' interview, translated by Odaily.

Interview Transcript

Opening remarks: The SEC is working on new regulations and reforms to enhance economic security and enrich investment diversity. SEC Chairman Paul Atkins elaborated on the vision in an exclusive interview at the New York Stock Exchange.

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

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

· Maria: It's been over 30 years since I first came to the New York Stock Exchange and became the first to broadcast live from the trading floor. Over these 30 years, we've seen tremendous changes. So how is today's U.S. capital market different from 30 years ago?

Atkins: The changes have been dramatic. Obviously, technological innovations like electronification and data processing have gradually replaced the old manual trading floors and traditional ways of operating. Now everything is electronic. Interestingly, 30 years ago I was a young staff member at the SEC, and now this is my third time returning to work at the SEC.

In the early 1990s, you might find it hard to believe, but at that time, retail investors held more than half of the total market value of listed companies. Of course, that's completely different now... Individual investors now mostly hold assets indirectly through pensions, ETFs, mutual funds, and other vehicles, but they are still a crucial part of the market. Retail investors remain very important. But the entire landscape has changed. The market is now faster, more dynamic, and clearly globalized. The next wave of change will come from digital assets, namely the digitization and tokenization of the market. I believe this will bring huge benefits by greatly reducing risk and increasing predictability through on-chain transparency.

· Maria: Please elaborate on the concept of tokenization. What does it mean for investors to shift from directly holding stocks or investing via index funds and ETFs to holding tokens representing partial ownership in companies? What is the development path?

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

The core advantage of tokenization is that if assets exist on the blockchain, the ownership structure and asset attributes will be highly transparent. Currently, listed companies often do not know exactly who their shareholders are, where they are, or where the shares are located.

Tokenization also promises to achieve "T+0" settlement, replacing the current "T+1" trading settlement cycle. In principle, on-chain delivery versus payment (DVP)/receipt versus payment (RVP) mechanisms can reduce market risk and increase transparency, while the current time gap between 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? Are mainstream banks and brokerages already moving toward tokenization?

Atkins: Absolutely. It may not even take 10 years worldwide... it could become a reality in just a few years. I think market modernization is positive, but the problem is that in recent years the SEC has gone against its historical tradition—historically, the SEC was not always a pioneer of innovation, but at least kept pace with the market, whereas in recent years it has almost stood in opposition to market innovation. This situation must end. We are actively embracing new technologies to ensure the U.S. remains at the forefront in areas like cryptocurrency.

The times have changed, and we need to bring new technologies into the country and let them develop under U.S. rules. The collapse of FTX did not affect customer segregated accounts protected by CFTC rules—this is a good example of how sound regulation protects investors.

· Maria: What specific impact will this have on the SEC's work?

Atkins: We have renamed the original "Crypto Task Force" to "Project Crypto".

A few weeks ago, I gave a speech proposing a new classification framework to clarify which assets are securities. Tokenized securities are clearly securities, while digital commodities, digital tools, digital collectibles, etc., are not. We will continue to follow the "Howey Test" established by the Supreme Court in 1946 to define securities.

At the same time, we plan to launch an "innovation exemption" policy next month, allowing companies to conduct proof-of-concept within controllable parameters such as time, user numbers, and funding scale, and then advance to marketization after receiving explicit SEC approval. We must provide investors with a clear compliance framework, and also provide innovators with a certain environment for product development.

· Maria: Regarding cryptocurrency-related legislation, have we discussed enough? There are already clear rules for stablecoins. Is the legislation for digital assets similar, or is it different?

Atkins: The Genius Act has already passed, which is a very good first step and marks the first time the U.S. has officially recognized a digital product (stablecoins). We appreciate Congress's passage and the President's signing. There is also a market structure bill (Clarity Act) that has passed the House and is awaiting further action in Congress.

Meanwhile, the SEC and CFTC are actively coordinating regulatory systems. The two agencies have long had differences, resulting in many potential products dying in regulatory gaps. We must work together, the CFTC has expertise in futures and derivatives markets, the SEC is proficient in spot markets, and there is no reason for the two sides not to cooperate. I believe cooperation will make the market more efficient and safer.

· Conclusion: This concludes Atkins' remarks. FOX's internal analysts then provided additional commentary, mentioning T+0 settlement, asset democratization, and Larry Fink's recent views.