SEC’s Atkins Says ‘Innovation Exemption’ for On-Chain Tokenized Securities Is Coming

SEC Chairman Paul S. Atkins said the agency is poised to release an “innovation exemption” that would allow tokenized securities to trade on-chain, marking a significant shift in the commission’s approach to digital assets.

Speaking at the Economic Club of Washington, D.C., Atkins described the coming exemption as a “cabined framework” that would let market participants begin facilitating on-chain trading of tokenized securities while the SEC develops longer-term regulatory standards. The announcement serves as a centerpiece of his Advance, Clarify, Transform — or ACT — strategy.

Atkins, marking roughly one year as SEC chairman, criticized the previous administration’s approach to digital assets, which he characterized as relying on investigation rather than engagement.

“We are on the cusp of releasing what I call an ‘innovation exemption,’ which will provide market participants with a cabined framework to begin facilitating the trading of tokenized securities on-chain in a compliant fashion,” Atkins said.

This move follows recent efforts to provide market clarity, including the publication of a crypto-token taxonomy that categorized five types of digital assets, four of which the agency deemed non-securities. By modernizing these frameworks, the SEC aims to stop the migration of American digital asset innovation to offshore jurisdictions, aligning with broader goals to cement the U.S. as a global hub for crypto-capital.

A Shift in Priorities

Atkins outlined three pillars of his ACT strategy.

• Advance: Modernizing rules to reflect the reality of current markets, specifically regarding crypto and the shifting of capital into private credit.
• Clarify: Eliminating jurisdictional friction. Atkins highlighted the recent memorandum of understanding with Michael S. Selig, chairman of the U.S. Commodity Futures Trading Commission as a vital step in coordinating oversight and replacing “regulatory no-man’s land” with a unified, fertile ground for innovation.
• Transform: A return to “first principles” and economic materiality. Atkins specifically targeted the decline in public company listings – noting a 40% drop since the mid-90s – and announced a “Make IPOs Great Again” agenda. This agenda includes proposals for an initial public offering “on-ramp,” expanded shelf registration access, and permitting flexible filing cadences.

“We are working to reverse the precipitous decline in public companies. A central objective for this goal is to rationalize disclosure requirements by delivering the minimum dose of regulation, again with materiality as our north star,” said Atkins.

Addressing the growth of private credit as a substitute for bank financing for smaller businesses, Atkins said the sector fills a real lending need but flagged opacity as a concern.

“Let me be clear that opacity in this space can be an issue. That valuation, transparency, and credit quality are key,” said Atkins. His focus remains on ensuring that a broader group of investors can access diversified choices – provided they have the appropriate fiduciary guidance and safeguards.

Rethinking Enforcement

Atkins said the SEC is “getting out of the way when we should” and “stepping in decisively where we must,” signaling a shift in the agency’s enforcement posture.

Atkins signaled a transition in the enforcement program, which he argued had previously functioned as an instrument of rulemaking. The new focus is centered on addressing actual investor harm and holding individual wrongdoers accountable. The SEC reported a 22% decline in enforcement actions for fiscal year 2025.

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