Atkins and Sacks: Pioneers of Crypto Regulation?

Following Gary Gensler’s resignation, Paul Atkins was nominated to take over as the new Chairman of the SEC—the approval of which would mark his return to the Commission after a 17-year hiatus and could mark a drastic change for the crypto industry and digital assets.

The following opinion editorial was written by Alex Forehand and Michael Handelsman for Kelman.Law.

Paul Atkins Returns: A New SEC

A current Chief Executive at Patomak Global Partners, Atkins is a veteran of the financial world. Atkins started his career as an attorney on Wall Street in the 1980s before eventually earning the title of SEC Commissioner in the early 2000s. Beginning his career in the financial wild west, and spending his tenure at the SEC in the wake of the dotcom bubble, Atkins has considerable experience in novel financial markets.

As head of a consulting firm that advises emerging fintech companies on the regulatory environment, Atkins has sensibly become involved in the crypto industry. Notably, in the Spring of 2020, Atkins joined the board of advisors for the Chamber of Digital Commerce, the world’s first and largest blockchain trade association. Prior to joining the Chamber’s board, Atkins served as co-chair of the Chamber’s Token Alliance, where he “focused on token issuances, trading platforms, and other areas under the SEC’s purview.”

Atkins has also served on the advisory board of Securitize, a company that works on tokenizing securities with Blackrock and $Ondo. Ondo Global Markets, which is set to launch early next year, plans to offer tokenized stocks and bonds on-chain. As Chairman of the SEC, Atkins would be able to open the door to tokenization companies that are looking to bring transparency and efficiency to traditional financial markets.

A firm believer in free markets, Atkins has notoriously criticized the Dodd-Frank legislation that came in the wake of the financial crisis as overly-burdensome on the banking industry. Given Atkins’ previous support of SEC Commissioner Hester Pierce’s crypto safe harbor proposal, it appears he will bring the same view to the crypto industry as Chairman.

This is evident by Atkins’ public advocacy for an SEC approach that enables new markets such as crypto to flourish in a healthy environment. For example, while at the Chamber of Digital Commerce, Atkins has been a longtime champion for bringing about regulatory clarity for token projects.

Criticizing the Howey test as “quite old” and questioning “whether or not it’s still current,” Atkins suggested the Supreme Court could use the Ripple case to reexamine Howey’s “coherence in the current environment and whether it needs to be tweaked.” Atkins has also previously indicated that the then-incoming SEC chair—Gary Gensler—could withdraw the agency’s lawsuit against Ripple. While that failed to happen under Gensler, Atkins’ comment raises an interesting possibility for the future of the SEC’s case with him now at the helm.

Paul Atkins’ nomination as Chairman of the SEC ushers in a wave of optimism for the crypto industry, potentially signaling an end to its unnecessary battle with the Commission. With his broad experience navigating both traditional and emerging markets from both the public and private sectors, Atkins is uniquely positioned to bridge the gap between legacy financial systems and the rapidly evolving blockchain and tokenization ecosystems by providing a clear regulatory environment.

The New Czar: David Sacks’ Mission to Jumpstart Crypto and AI

Another win for the crypto community was scored with the appointment of David Sacks as the United States’ first Crypto and AI Czar. Making his name as an early PayPal executive, Sacks has since developed his own successful venture capital firm, Craft Ventures.

A believer in revolutionizing the payments system, Sacks did not stray far from the space. Since leaving PayPal, Sacks has invested significantly in cryptocurrencies like bitcoin and Solana, while also helping fund crypto companies such as Lightning Labs, BitGo, and Bitwise.

Sacks has been a longtime proponent of digital assets, explaining in 2017 that cryptocurrencies are fulfilling PayPal’s “original vision” of creating a “database of money.” In the runup to the recent election, Sacks highlighted “[w]hat the crypto industry has been asking for more than anything else is a clear legal framework to operate under,” and suggested that a Trump victory would provide that.

Now, the president-elect has given Sacks the opportunity to make that a reality. According to Trump’s announcement, Sacks’ primary role as Crypto and AI Czar will be “to work on a legal framework so the Crypto industry has the clarity it has been asking for, and can thrive in the US.”

Sacks has been a critic of the SEC’s unpredictable approach to regulation by enforcement and advocates for delineating a clear line between SEC and CFTC jurisdiction. On his All-In podcast, Sacks supported the Financial Innovation and Technology for the 21st Century Act, which would have classified digital assets running on decentralized blockchains as commodities subject to the CFTC’s jurisdiction. Despite ultimately failing in the Senate, Sacks is hopeful some variation of the bill will pass in a now-united Congress. In addition to Sacks, some Courts have also taken umbrage with the SEC’s positions relating to the digital asset space.

Given the novelty of the Crypto and AI Czar position, it is unclear how much of a role Sacks will be able to play in the formal decision-making process. Regardless, the Silicon Valley financier will be able to act as a knowledgeable liaison between the President and the regulatory agencies and guide policy discussions toward establishing a healthy framework for crypto.

The Future, In America

Together, Atkins and Sacks bring a breadth of experience and a forward-thinking approach to navigating the complexities of emerging technologies. From Atkins advising Wall Street in the original Wild West of finance, to Sacks’ membership in the “PayPal Mafia,” these two have a unique understanding of revolutionary finance.

Atkins and Sacks’ nominations mark a pivotal moment for cryptocurrency and suggest a brighter regulatory future ahead. Pioneers in both the AI and crypto industries—from Sam Altman to Brian Armstrong (see also)—have congratulated the two on their nominations and shown their enthusiasm to begin building in a friendly environment. Commissioner Pierce expressed her “delight[]” to work with Atkins again “to advance free markets, capital formation, investor choice, and innovation.”

It is currently unknown how Atkins’ nomination will change the enforcement priorities of the SEC for 2025. As attorneys operating exclusively in the digital asset space, we are optimistic about the regulatory environment taking shape under the leadership of Paul Atkins and David Sacks. With Atkins’ commitment to regulatory clarity and free markets and Sacks’ entrepreneurial vision for crypto and AI, this duo has the potential to return the United States to its position as a leader in financial innovation.

Staying informed and compliant in this evolving landscape is more critical than ever. Whether you are an investor, entrepreneur, or business involved in cryptocurrency, our team is here to provide the legal counsel needed to navigate these exciting developments. If you believe we can assist, schedule a consultation here.

This article originally appeared at Kelman.law.

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