Author: Paul S. Atkins, Chairman
Translated by: Deep Tide TechFlow
Thank you, and good afternoon. It’s a pleasure to be here today. I’d like to begin by expressing my gratitude to Commissioner Peirce and the Crypto Assets Task Force for organizing this event, as well as Commissioners Crenshaw and Uyeda for their participation. A special thanks also goes to our panelists and moderator Troy Paredes for generously contributing their time and insights to this discussion.
Today’s roundtable focuses on "Decentralized Finance and the American Spirit." This theme resonates deeply because the core values of economic freedom, private property rights, and innovation—central to the American ethos—are inherently woven into the fabric of DeFi.
The Revolutionary Potential of Blockchain
Blockchain is a profoundly creative and potentially revolutionary innovation, reshaping how we think about intellectual and economic property ownership and transfer. As shared databases, blockchains enable digital asset ownership without reliance on intermediaries or centralized institutions. These peer-to-peer networks incentivize participants to validate and maintain the database through economic mechanisms, creating free-market systems where users pay demand-based fees to network participants for transaction inclusion in limited-capacity "blocks."
Previously, U.S. government actions—ranging from lawsuits to regulatory threats—hindered American participation in these market-based systems, alleging that participants and staking-as-a-service providers might engage in securities transactions. I appreciate the Division of Corporation Finance’s clarification that voluntary participation in proof-of-work or proof-of-stake networks as miners, validators, or staking providers falls outside federal securities laws. While this is progress, it isn’t legally binding. The SEC must formalize rules under Congressional authority.
Autonomy and Digital Wallets
A cornerstone of blockchain technology is the ability to self-custody crypto assets via personal digital wallets. The right to manage private property autonomously is fundamental to American values—a right that shouldn’t vanish online. I advocate for greater flexibility in self-custody, especially when intermediaries add unnecessary costs or restrict participation in staking and other on-chain activities.
Past administrations stifled innovation by claiming software developers might engage in brokerage activities. However, engineers shouldn’t face federal securities laws merely for publishing code. As one court noted, holding autonomous car developers liable for third-party misuse is irrational—similarly, we shouldn’t punish innovators for others’ actions.
Self-Executing Software and Regulatory Challenges
Entrepreneurs are building operator-less software applications. Self-executing code enabling private peer-to-peer transactions sounds futuristic, but blockchain makes it real. This new software category eliminates intermediaries, challenging century-old regulatory frameworks. We mustn’t let outdated rules hinder transformative technologies.
These systems demonstrated resilience during crises. While centralized platforms faltered, many on-chain systems operated flawlessly per their open-source designs.
Modernizing Securities Regulations
Most securities rules regulate issuers and intermediaries (e.g., broker-dealers, advisors, exchanges). Drafters likely didn’t foresee software replacing these entities. I’ve asked staff to explore guidance or rulemaking for registrants interacting with such systems legally.
I’m excited about issuers and intermediaries using on-chain systems to reduce friction, enhance capital efficiency, and innovate financial products. Current regulations accommodate new technologies, but I’ve tasked staff with evaluating updates to better support on-chain financial system managers.
Innovation Exemption Framework
As the Commission develops tailored rules for on-chain markets, I’ve directed staff to consider a conditional exemption framework ("Innovation Exemption") to accelerate the rollout of on-chain products/services. This aligns with the vision to make the U.S. the "global crypto capital" by fostering compliance-friendly innovation.
Thank you for your attention. I look forward to the discussion.
FAQ Section
Q1: How does DeFi align with U.S. values?
A: DeFi embodies economic freedom, private property rights, and innovation—core tenets of the American spirit.
Q2: What’s the Innovation Exemption?
A: A proposed framework allowing faster market entry for compliant on-chain products/services, boosting U.S. crypto leadership.
Q3: Why emphasize self-custody?
A: Autonomy over assets is a fundamental right; intermediaries shouldn’t impose unnecessary restrictions.
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Note: This article represents the author’s views, not investment advice.
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