Full Transcript of the SEC Chair's Speech on the "Crypto Initiative"

Good afternoon, everyone. Thank you, Norm, for the enthusiastic introduction, and thank you all for inviting me today. I am truly honored to join you, especially at a moment when America stands poised to assert leadership in the crypto asset market. Before I share my thoughts, I want to extend special thanks to the America First Policy Institute for organizing this timely discussion. And for the benefit of our compliance team, let me state for the record: The views I express today are mine alone and do not necessarily reflect those of the SEC or any other commissioner.

Today, I will discuss what Commissioner Hester Peirce and I call “Project Crypto,” which will serve as the SEC’s guiding vision as we support President Trump’s historic initiative to establish the United States as the world’s crypto capital. But before detailing our strategy for crypto market leadership, I’d like to revisit some pivotal moments in the history of capital markets—moments that echo our present situation, reminding us that the future we shape must honor the legacy we have inherited.

From Buttonwood Tree to Blockchain: The Evolution of Capital Markets

Innovation has always swept across our capital markets—sometimes gently, sometimes like a storm. In 1792, it stirred the leaves of a buttonwood tree, where more than twenty stockbrokers gathered to sign an agreement that became the foundation of the New York Stock Exchange. That brief, handwritten parchment—less than a hundred words—ushered in a graceful system that has directed capital flows for generations.

Our markets have never stood still; they have grown, adapted, and evolved with the ideas and technologies of their times. The lifeblood of these markets is human engagement. Markets channel human ingenuity into tackling society’s toughest challenges and reward those who deliver the most valuable and widely adopted solutions. This is Adam Smith’s “invisible hand” at work: Even when people pursue personal gain, markets can guide their actions to serve the public good.

The SEC’s mission is to protect such a marketplace—one where creativity and skill benefit society. Throughout its history, the SEC has both fostered and, at times, inadvertently stifled innovation. Thankfully, progress ultimately prevails. When we approach innovation with prudence instead of fear, America consistently raises the bar for global leadership.

In the 1960s—before my involvement—Wall Street was experiencing a bull market, but the infrastructure behind the scenes was under serious strain. Most clearing and settlement relied on costly, manual processes. Paper stock certificates accumulated in vast quantities, and clerks transported them by cart throughout Wall Street and financial centers nationwide.

This paper-based clearing and settlement system was designed for a slower era and could no longer handle rapidly growing trading volumes. Delays at a single company could disrupt the entire system; lost and stolen securities were common; failures in trade settlements climbed sharply; and some undercapitalized broker-dealers even faced bankruptcy. As a result, trading hours were reduced, and exchanges closed on Wednesdays to allow firms to catch up with mountains of paperwork.

The SEC Chairman at the time called this systemic collapse “the most severe and prolonged crisis in the securities industry in forty years... bankruptcies and a sharp loss of investor confidence.” To its credit, the SEC responded proactively, spurring market participants to create what is now the Depository Trust & Clearing Corporation (DTCC), fundamentally transforming how securities are held and traded.

From that point forward, there was no longer a need to pass paper certificates between clients and brokers, or among brokers. Securities ownership was recorded electronically, certificates were “immobilized” and securely stored in vaults, and ownership transferred by computer—laying the foundation for today’s clearing and settlement systems.

This ticker tape machine beside me was once a revolutionary tool, delivering real-time market data line by line. But innovation shouldn’t be a relic of the past.

By the late 1990s, electronic trading systems surged in popularity, upending many long-held assumptions about market structure. Then-SEC Chairman Arthur Levitt recognized that the SEC had a duty to allow regulatory flexibility for electronic market innovation. In 1999, the Alternative Trading System Regulation (Reg ATS) was introduced, allowing these systems to operate as broker-dealers rather than as traditional exchanges.

That brings us to today—a moment that calls for American ambition, and an initiative bold enough to unleash it.

We cannot let our regulatory frameworks be frozen in the analog age or shy away from the next frontier. The future is coming fast, and the world won’t wait for us. America cannot simply keep up with the digital asset revolution—we must lead it.

Pioneering the Future: U.S. Leadership in a New Financial Golden Age

Today, let me state unequivocally: As chair, I will not allow the SEC to stand idle while innovation flourishes overseas and our capital markets stagnate. To realize President Trump’s vision of making the U.S. the global crypto hub, the SEC must holistically assess the potential benefits and risks of moving our markets from off-chain to on-chain.

We now stand at the threshold of a new era in capital market history. As mentioned earlier, today I officially announce the launch of Project Crypto—an SEC-wide initiative to modernize securities regulations so America’s financial markets can operate fully on-chain.

Just a few weeks ago, President Trump signed the GENIUS Act, establishing the world’s gold standard for stablecoin regulation in payments. Following the signing, the President publicly backed congressional passage of key crypto market structure legislation this year. I applaud the House for its bipartisan support thus far and look forward to seeing the Senate build on that momentum, strengthening our laws to guard against regulatory overreach and cement U.S. leadership in the global crypto sector.

Yesterday, the President’s Working Group on Digital Assets issued the PWG Report, providing clear recommendations for the SEC and other federal agencies to uphold American leadership in the crypto asset market. This report is a blueprint to ensure the U.S. remains at the forefront of blockchain and crypto technology. As the President said last week, he wants “the entire world to run on American technology infrastructure.” I am ready to help make that vision a reality.

Accordingly, I have launched Project Crypto and instructed the SEC’s policy division to work closely with Commissioner Peirce’s Crypto Working Group to rapidly develop a plan for implementing the PWG Report’s recommendations. Project Crypto will keep the U.S. the world’s premier destination for entrepreneurship, advanced technology development, and capital market participation. We will bring back the crypto companies that left due to the prior administration’s “regulation by enforcement” and “Operation Chokepoint 2.0.” Whether you’re a legacy firm or a new entrant, the SEC welcomes all innovators.

Bringing Crypto Assets Home: The SEC’s New Era

Project Crypto will comprise a series of SEC initiatives.

First, we’re committed to bringing crypto asset issuance back to America. The convoluted offshore corporate structures, pseudo-decentralization, and confusion over whether crypto assets are securities will soon be history. President Trump has made it clear: America is now entering its “Golden Age,” and under our new agenda, so will the crypto asset economy.

Following the PWG Report, one of my top priorities is to rapidly establish a U.S. regulatory framework for crypto asset issuance. Capital formation is core to the SEC’s mission, yet for too long the agency has neglected the market’s need for choice and has suppressed crypto-based capital-raising. This forced crypto markets to shift away from asset issuance, depriving American investors of the chance to participate productively in this technological revolution. The SEC’s longstanding avoidance of crypto and its “act first, assess later” approach must be relegated to history.

Although the SEC has previously defined most crypto assets as securities, the truth is, most are not. Yet the ambiguities of the Howey Test have led some innovators to treat all crypto assets as securities to be safe. American entrepreneurs are using blockchain to modernize traditional systems. For instance, Ohio’s current U.S. Senator, Bernie Moreno, was an entrepreneur who founded a company to put car titles on-chain. Seeing inefficiencies in title transfers, he used blockchain to provide a compelling solution.

These entrepreneurs deserve clear, reliable standards for determining whether their business activities fall under securities law. I have directed staff to develop clear guidelines so market participants can determine if a crypto asset is a security or an investment contract. Our goal: enable clear classification of crypto assets—digital collectibles, digital commodities, stablecoins—and assessment of the underlying economic activity. With this, market participants can judge whether issuers have ongoing commitments or obligations, and thus, whether the asset constitutes an investment contract.

Moreover, being categorized as a security should not be a business death sentence. We need a regulatory framework that enables crypto securities to thrive in U.S. markets. Many issuers may opt for the flexibility securities law grants in product design, and investors can benefit from features like dividends and voting rights. Projects should not be pressured to set up DAOs, offshore foundations, or to decentralize prematurely. I am excited by new enterprise uses of crypto securities, such as tokenized stocks contributing to blockchain consensus.

Accordingly, for crypto transactions subject to securities law, I have instructed staff to propose dedicated disclosure rules, exemptions, and a “safe harbor” regime—including for ICOs, airdrops, and network incentive programs. Our aim is for issuers to include American users in their offerings, enjoying legal certainty and a welcoming regulatory climate. If we continue on this path, I believe we could see a Cambrian explosion of innovation.

Additionally, many companies want to tokenize common stock, bonds, or partnership interests—or tokens representing third-party securities. Because of U.S. regulatory hurdles, this innovation has largely moved offshore. At the same time, our policy division routinely receives exemption requests—from top Wall Street names to Silicon Valley unicorns—seeking approval to distribute security tokens domestically. I have instructed staff to work with such firms and grant exemptions as appropriate to ensure America stays ahead in crypto innovation.

Expanding Freedom: A Broad Spectrum of Custody and Trading Choices

Second, to achieve the President’s vision, the SEC must guarantee market participants maximum freedom to choose their custody and trading venues. As I’ve asserted, the right to own and manage private property is fundamental to American values. I firmly believe every individual has the right to self-custody their crypto assets and engage in on-chain activities like staking. Of course, some investors may choose to entrust their assets to SEC-registered intermediaries—such as broker-dealers or investment advisers—who then take on additional regulatory requirements for custody services.

Implementing the PWG Report’s call for “modernizing SEC-registered intermediary custody obligations” will be an early priority of my tenure. The previous administration’s so-called “Special Purpose Broker-Dealer Framework,” SAB 121, and “Operation Chokepoint 2.0” have nearly wiped out compliant crypto custody providers in the market. The current rules ignore the unique properties of crypto assets. I have directed staff to review and, if needed, adapt the framework—through exemptions or rule amendments—to support the growth of crypto custody services.

The PWG Report also recommends letting market participants operate multi-line businesses under the most effective licensing structure. We must not force firms into a regulatory “Procrustean bed” that no longer fits the industry. I support allowing them, as long as investor interests are protected, to freely choose the regulatory path most suitable for their business strategy.

Advancing Super-Apps: Integrated Products and Services

Third, another priority of my chairmanship is enabling market participants to innovate under a “super-apps” framework. What is a super-app? Simply put, securities intermediaries should be able to offer a broad array of products and services on a single platform, under one license. A broker-dealer with an Alternative Trading System (ATS) could offer non-security crypto trading, security token trading, traditional securities, staking, lending, and more—without navigating over fifty state licenses or a slew of federal registrations.

Federal securities law does not actually prevent registered trading platforms from listing non-securities. I’ve directed staff to provide additional guidance and develop pathways to make these “super-apps” a reality. Perhaps one day, we’ll call it “Reg Super-App.”

According to the PWG Report, the SEC should cooperate with other regulators to build the most simple and efficient licensing system for registered intermediaries, avoiding redundant oversight. This “light touch” is already standard in banking, where banks rarely need to register separately as brokers or clearing firms. Regulations should protect investors and encourage business growth—overregulation should not drive firms offshore, nor should regulatory burdens stifle small and midsize enterprises to the advantage of giants.

Pursuant to the PWG Report, I have instructed staff to design a framework allowing both non-security and security crypto assets to be traded side-by-side on a single SEC-regulated platform. I am also exploring ways to leverage the Commission’s powers to let certain crypto assets be listed on state-licensed or CFTC-regulated venues—even if Congress has not yet granted new authority for margin, unlocking even more liquidity.

Unleashing America’s Market Potential: Powerful On-Chain Software

Fourth, I’ve instructed staff to update outdated regs to unlock the potential of on-chain software systems in U.S. securities markets. On-chain software takes many forms: some systems are truly decentralized and operate without intermediaries, while others are maintained by designated operators. Whatever the structure, all deserve a place in our financial markets.

Any crypto market structure regulation must provide clear pathways for developers of on-chain software that does not rely on centralized intermediaries. DeFi—like automated market makers—enables automated, non-intermediated financial activity. U.S. federal securities law has traditionally assumed intermediaries needing oversight, but that doesn’t mean we should inject intermediaries just to satisfy outdated regulations. If the market can function without them, we should respect that reality.

We will provide room for both centralized and decentralized models. We’ll protect developers who merely publish code, draw rational boundaries between intermediary and non-intermediary activities, and create workable rules for intermediaries looking to operate on-chain systems. DeFi and other on-chain systems will be integral to our securities markets, not suffocated by excessive or redundant regulation.

To achieve this vision, we must revise existing rules. Supporting on-chain trading of securities could require amending Regulation NMS. Two decades ago, I co-authored a dissent against Reg NMS with then-Commissioner Cynthia Glassman, and today those concerns are even more valid. Over the last twenty years, Reg NMS’s burdens have distorted markets and hindered natural evolution. Congress envisioned “competition, not unnecessary regulation” as the heart of the national market system. I am committed to restoring that vision, spurring fresh innovation and competition.

Driving Innovation: Commercial Viability as Our Guiding Principle

Finally, innovation and entrepreneurship are the engines of the American economy. President Trump has said America is a “nation of builders.” Under my leadership, the SEC will champion that ethos, not suppress it by red tape or cookie-cutter rules. The Commission is actively considering industry reform proposals to spark innovation and is exploring the adoption of “innovation exemptions” so registered and unregistered firms can swiftly roll out new business models—even when those models don’t fit existing rules.

As I envision it, the innovation exemption would let technology pioneers and entrepreneurs immediately participate in the market without being hobbled by obsolete or stifling requirements. They would, of course, comply with certain principles-based guardrails to achieve the core policy goals of federal securities law. These might include commitments to periodic SEC reporting, whitelisting or “qualified pool” features, and only permitting securities tokens meeting compliance functionality (such as ERC3643) to circulate. I encourage all market participants and SEC staff to put “commercial viability” at the center of system design.

Conclusion

As we pursue these priorities, I look forward to working across the government to make America the global crypto capital. This is not just regulatory reform—it’s a generational opportunity.

From parchment under the buttonwood tree to digital ledgers on the blockchain, the winds of innovation are still blowing strong. Our mission is to keep those winds driving forward American leadership. We have never settled for following others. We don’t sit on the sidelines. We lead. We build. And we will ensure that the next chapter of financial innovation is written—right here—in America.

Thank you all for your attention. Please watch for our upcoming announcements and proposals—and as always, your feedback is welcome.

Disclaimer:

1. This article is reprinted from Foresight News; copyright belongs to the original author [Alex Liu, Foresight News]. If you have any objection to this reprint, please contact the Gate Learn team; we will promptly address your concern following internal procedures.
2. Disclaimer: All views and opinions expressed in this article are those of the author alone and do not constitute investment advice.
3. Other language versions of this article are translated by the Gate Learn team. Do not copy, distribute, or plagiarize any translated version unless Gate.com is specifically cited.