SEC Chairman Paul Atkins Wants to Let Registered Broker-Dealers Custody and Trade Cryptocurrencies

Saying he sees this as part of the path to a crypto and stock trading “super-app,” Atkins said in prepared remarks today, May 19, that this would “reduce costs for investors”

Chairman of the U.S. Securities and Exchange Commission (SEC) Paul Atkins has stated that he envisions a future where a single firm could be registered with the SEC to both trade and custody cryptocurrencies, even if the assets are not deemed securities.

In his prepared remarks for the U.S. Chamber of Commerce’s Center for Capital Linkages on Friday, May 19, Atkins said that this would reduce costs for investors while allowing non-security trading to enter a regulated environment at the federal level expeditiously.

Currently, Congress is working on a broad cryptocurrency market regulation bill, and there is ongoing drama over the passage of the Senate’s GENIUS Act for regulating stablecoins. A stablecoin bill was widely seen as far easier to pass than a general market structure bill, but it got caught up in politics.

The Senate is trying to bring the bill to another initial vote later Friday that would get the bill to reach the Senate floor for a full vote faster.

Crypto firms and investors in the U.S. have faced confusion over the years about which regulator primarily oversees the industry. When digital assets are determined to be securities, then firms trading them need to register with the SEC, generally speaking. But other agencies, like the Commodity Futures Trading Commission (CFTC), are in charge of regulating non-security assets, like commodities and derivatives.

In crypto, however, the distinction is not always clear for all assets, and many firms, both exchanges and protocols, have been in long legal battles with the SEC over securities law.

“Chairman Atkins’ call to let SEC-registered firms custody and trade both securities and non-securities in one place could be one of the most consequential steps the Commission has taken toward bridging traditional finance with digital assets,” said Sid Powell, co-founder and CEO of Maple Finance, in an email to The Defiant.

“Today, institutional investors face significant operational and regulatory inefficiencies when dealing with tokenized products or crypto-native assets, simply because current rules enforce arbitrary boundaries between asset types.”

Maple’s Powell participated in the most recent roundtable from the SEC’s new Crypto Task Force, “Tokenization: Moving Assets Onchain: Where TradFi and DeFi Meet,” on May 12.

A single framework for crypto firms would make it easier for the market by reducing friction as well as signal “a more mature” posture towards regulating crypto, he said.

“For years, artificial jurisdictional boundaries and bureaucracy between the CFTC and SEC have slowed innovation, increased costs and destroyed capital efficiency,” said Chris Perkins, president of crypto-native investment firm CoinFund.

Looking at Atkins' remarks, Perkins said “regulators should work in lockstep to make accessing regulated markets easier and enable operational and capital efficiencies for market participants. I have a feeling that under Paul Atkins' SEC, and Brian Quintenz's CFTC this will finally become a reality.”

A crypto ‘super-app’

A crypto trading “super-app” policy would evidently mean firms that offer trading or custody of securities and non-securities could be regulated by the SEC.

“The ‘super app’ idea reflects a future where capital markets are accessible through a single interface, streamlining everything from trading to custody and settlement,” Powell said. “For innovators in the space, it reinforces the thesis that asset management will increasingly move on-chain as a result of the transparency and liquidity afforded by tokenized products.”

Commenting on Atkins’ remarks today that the SEC had its “head in the sand” when it came to regulating crypto, Gerald Gallagher, general counsel for Sei Labs — the team behind Layer 1 blockchain Sei — told The Defiant in an email that the SEC now recognizes the crypto industry’s need for “regulatory clarity, predictability and honest counterparties.”

Gallagher added that he was heartened that Chairman Atkins “pointed out that technology should allow for more innovative business models, like the ‘super app’ approach to both digital asset and traditional securities custody for compliant parties.”